Australian police have carried out raids in Sydney and Melbourne to foil what they called a planned terror attack.

About 500 officers took part in the raids early on Tuesday, in the country's largest ever counter-terrorism operation.

Sixteen people were arrested and chemicals, weapons and computers seized from the 23 homes raided.

Vehicles were searched near where one of the suspects was shot and wounded in a Sydney street.

Bomb squad officers said a remote-controlled robot had found a gun in a backpack worn by the suspect.

New South Wales police chief Ken Moroney said a "potentially catastrophic attack" had been averted.

The suspects were charged in court with offences including membership of a "terrorist organisation".

Prosecutors said chemicals had been found of the kind used in the London Underground bombings.

Media strained to get pictures of the suspects, among them outspoken Algerian-Australian cleric Abu Bakr.