The Bali bombing has made Australians extremely nervous

Bomb squad officers and elite commandoes are taking part in a series of drills designed to counter terrorist attacks in the capital, Canberra, and around a naval base close to Australia's largest city, Sydney.

The BBC correspondent in Sydney says concern over terrorism has increased, following the deaths of nearly 90 Australians in the bombings on the Indonesian island of Bali last year.

A senior analyst at the Australian Strategic Policy Institute, an influential think tank, said the country would not be able to cope with a serious terrorist incident.

Australian officials said security personnel at a central Sydney office tower noticed an illegally parked car on Tuesday, and called in the police bomb squad, according to the French news agency AFP.

"The illegally parked car was identified by security staff and that's reassuring," the agency quoted New South Wales state Premier Bob Carr as saying.

"I'm advised they picked it up on their normal patrol and, as they've been trained to do, they alerted the Local Area Command, and that activated the bomb disposal personnel with their equipment and their expertise to be quickly on site," he said.

Al-Qaeda warning

Details of the operation, code-named Exercise New Deal, were kept secret "in order to adequately test a evaluate crisis and consequence management capabilities," Attorney-General Daryl Williams said.

Earlier this month the government said army reservists would play a key part in domestic security.

Civilian part-time soldiers will be given the responsibility of defending power stations, oil refineries, bridges and iconic landmarks such as the Sydney Opera House.

Australia, which sent a 2,000-strong military force to fight in Iraq, acknowledges that its profile as a potential target has risen.