SYDNEY (Reuters) - Two men have been arrested in Sydney after a raid by Australian counterterrorism police found a hunting knife, a flag and other items, raising suspicions of a "beheading plot," the Daily Telegraph reported on Wednesday.
A New South Wales police spokeswoman would not comment on the details of the report, but said two men were assisting police with inquiries after an operation on Tuesday afternoon.
A media conference was planned for later on Wednesday.
In December, two hostages died as police stormed a cafe in central Sydney, ending a 17-hour siege. The gunman, Man Haron Monis, a self-styled sheik who harbored deep grievances against the Australian government and sought to align himself with the Islamic State militant group, was also killed.
A number of raids have taken place in Sydney and Melbourne since Australia raised its national terror threat level to "high" for the first time in September, citing the likelihood of attacks by Australians radicalized in Iraq or Syria.
Australia, a staunch ally of the United States and its action against the Islamic State in Syria and Iraq, believes at least 70 citizens were fighting in the region, backed by about 100 Australia-based "facilitators".
(Reporting by Lincoln Feast, editing by G Crosse)