Police said the teenagers were inspired by the hardline, self-declared "Islamic State" (IS) fighters and had planned a major terror attack during the veterans' day events next week in Melbourne. They are marking the centenary on April 25 of the Australian and New Zealand Army Corps (ANZAC) landings at Gallipoli during World War I.

Victoria Police deputy commissioner Shane Patton told reporters Saturday the plot was inspired by IS. "Some evidence that we have collected at a couple of the scenes and some other information we have leads us to believe that this particular matter was ISIS-inspired."

The arrests were made during an operation in suburban Melbourne carried out early in the morning by Victoria state police and Australian Federal Police. There were further searches in the southeast of the city, a joint statement from the two forces said.

All five of those arrested were from the suburbs in the city's far southeast. Two 18-year-olds were arrested for alleged terrorism-related offenses. A third 18-year-old was arrested for weapons offenses and two others, aged 18 and 19, were being held in custody and helping police with their enquiries.

"It is alleged the men were undertaking preparations for planning a terrorist act in Australia, which included targeting police officers," the statement said.

At a press conference later on Saturday, Australian Federal Police Acting Deputy Commissioner Neil Gaughan said, "at this stage we have no information that it was a planned beheading. But there was reference to an attack on police.”

In a separate news conference, federal police deputy commissioner Michael Phelan (pictured above, left, with Australian Prime Minister Tony Abbott) said the detained teenagers had links to 18-year-old Numan Haider, who stabbed two Melbourne police officers and was subsequently shot dead last September.

Phelan added that the youths arrested had been monitored for months by authorities, but their investigation was ramped up when it became apparent they were planning a specific attack.

"This is a new paradigm for police," Phelan said. "These types of attacks that are planned are very rudimentary and simple. ... All you need these days is a knife, a flag and a camera and one can commit a terrorist act."

Australia has recently sent hundreds of soldiers to Iraq to help train forces fighting IS. The government had raised its security threat level to 'high' last September and carried out a series of counterterrorism raids. Of the 110 Australians estimated to have left to fight with IS in Iraq and Syria, more than 30 have returned to Australia. At least 20 Australians fighting for IS have been killed in the conflicts, according to intelligence agencies.

Concern about radicalization was heightened following the siege last December at a Sydney café by a man trying to link his action to IS.

jlw, jm/bw (Reuters, AFP)