The Islamic State-inspired plot involved detonating “improvised” explosives, according to the country’s Prime Minister Malcolm Turnbull.
Mr Turnbull said: “Our police and security agencies have disrupted a very substantial terrorist plot.
“The Victoria Police, working with the Australian Federal Police and Australian Security Intelligence Organisation, have arrested seven persons.
They want to frighten Australians, they want to divide Australians, they want us to turn on each other, but we will not let them
“What they have uncovered is a plot to explode improvised explosive devices in central Melbourne in the area of Federation Square, on or around Christmas Day. They want to frighten Australians, they want to divide Australians, they want us to turn on each other, but we will not let them.”
Three men, Hamza Abbas, 21, Ahmed Mohamed, 24, and Abdullah Chaarani, 26, are due to appear in court in April.
The plot is said to have involved improvised explosives
400 police officers were involved in the operation
Victoria State police chief Graham Ashton said the plot was inspired by Islamic State propaganda.
The police claims the plot was inspired by the Islamic State
He added: “We believe that there was an intention to conduct what we call a multi-mode attack, possibly on Christmas Day.”
The operation involved 400 police officers.