Seven people were arrested overnight at properties in Flemington, Meadow Heights and Dallas in Melbourne over the alleged plot, which police said was inspired by the Islamic State (IS) group.

Victorian Premier Daniel Andrews described the plot as an “act of evil”, while Victoria Police Chief Commissioner Graham Ashton said police had seized “the makings of an improvised explosive device”.

Speaking at a press conference today, Mr Turnbull said: “Overnight our police and security agencies have disrupted a very substantial terrorist plot.

“Overnight, the Victoria Police, working with the Australian Federal Police and ASIO, have arrested seven persons, five of whom are still in custody, searched five premises and are continuing to search them.

“What they have uncovered is a plot to explode improvised explosive devices in central Melbourne in the area of Federation Square, on or about Christmas Day.

“This is one of the most substantial terrorist plots that have been disrupted over the last several years.”

More: ABCnews