Hundreds of Australian police on Saturday arrested five teens planning a terrorist attack next week at an event to mark the centenary of the landings at Gallipoli during World War One, Australian Prime Minister Tony Abbott said.

More than 200 police were involved in a series of raids in the southern city of Melbourne in the early hours of Saturday, police said, following a month-long sting operation. Five men aged 18 and 19 were detained.

The run-up to this year's centenary - a major holiday in Australia and New Zealand - has been marked by numerous television programs and commemorations, sparking concerns that radicals may target the celebrations for a high-profile attack.

"There were a series of raids in metropolitan Melbourne. Five people were arrested," Prime Minister Tony Abbott told reporters. "Two will be charged with preparing a terrorist act.

"The act that we believe was in preparation involved attacks against police officers on ANZAC Day," he said.

Senior police officials said that they found "edged weapons" including a sword and knife during the raids, but were confident the threat had been contained.