A 20-year-old, born in Australia to Somali parents, was arrested in a raid on a house in Melbourne and is expected to be charged in the next few days.
Police say the alleged ISIS sympathiser planned to buy a gun and kill as many revellers as possible on during the December 31 celebrations in Melbourne’s popular Federation Square.
They claim he downloaded an online al-Qaeda guide on how to commit terror acts using firearms but was arrested before he got his hands on a weapon.
Victoria Police Deputy Commissioner Shane Patton said: “We will be alleging that he was intending to use a firearm to shoot and kill as many people as he could in the Federation Square area on New Year’s Eve.
“It is a tremendous concern to us that during the festive season, when people are out enjoying themselves, there is a potential plot to commit a terrorist act.
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“That is a huge issue for us but that is why we put the resources in.”
He said the arrest meant the threat “has been removed”.
Federation Square is in the heart of the city, opposite busy Flinders Street train station and St Paul’s Cathedral.
It is one of the most popular places to see in the New Year and will be packed on December 31.
Dep Com Patton said the suspect, who lived with his parents and worked in a computer repair shop, had been on their radar since the beginning of the year and was part of a small community of extremists police had been monitoring.
His behaviour had gradually escalated over time but police believe he was acting alone.
Dep Com Patton said: “The potential of the attack was catastrophic.
“We will be exploring where this person of interest got the idea from.
“Certainly, he becomes particularly energised when he sees other activities in the terrorist arena occurring.”
Justice Minister Michael Keenan said the fact the festive season was being targeted “reminds us of the depravity of terrorists”.
He said: ”They seek to strike fear in the community when Australians are enjoying time over the Christmas period with their families and friends.”