Sydney - A senior Islamic State commander directed a group of Australian men to build a bomb destined for an Etihad Airways flight out of Sydney, with a second poisonous gas plot also in the works, police alleged on Friday.
The improvised explosive device was due to be smuggled onto the July 15 service, but the attempt was aborted before they reached security.
Two men - Khaled Khayat and Mahmoud Khayat - have been charged with terrorism offences and were refused bail on Friday, with a third still being questioned.
"This advice was coming from a senior member of the Islamic State," Australian Federal Police Deputy Commissioner Michael Phelan said, referring to him as a "commander" based overseas.
Police also foiled a second alleged plot involving a "chemical dispersion device", designed to release hydrogen sulphide, but this was in the early stages.
Hydrogen sulphide is highly toxic, and often fatal for people exposed to it.
"Not only have we stopped the IED that was believed to go on the plane but we have also completely disrupted the intended chemical dispersion device," said Phelan.
The second plan was hatched after the first one failed, police alleged, and was not necessarily targeted at a plane.
"They were talking about crowded closed spaces, you know, potentially public transport, and so on," Phelan said, but added that they "got nowhere near making one".
Communications with IS began in April with the group sending components and propellants through international cargo from Turkey to the men, police said.
They then directed them on how to build a bomb with what was "high military-grade explosives" that would have caused "significant damage".
"With assistance from the ISIL commander, the accused assembled the IED into what we believe was a functioning IED to be placed on that flight," said Phelan, referring to Islamic State by an alternative acronym.
"There is a little bit of conjecture as to why it didn't go ahead. It didn't get past the check-in."
Police are working on the theory that it was called off because the device - disguised as a kitchen appliance - may have been too heavy as check-in luggage.
The destination of the flight was not revealed, although reports have previously suggested it was Abu Dhabi. Etihad earlier this week confirmed it was working with authorities in Australia on their investigation.
Police would not reveal who the IS link was but said it will be alleged that the men were introduced to him by a relative who is a senior IS member in Syria.
"It is a concern that it got through," said Phelan about the bomb components arriving in Australia through the mail.
"What we're alleging is the components of the IED originated in Turkey at this stage. We are very confident that we have found every single component of that IED."
Security was tightened at domestic and international airports across Australia after four men were arrested in raids in Sydney on Saturday, with Phelan calling it "one of the most sophisticated plots that has ever been attempted on Australian soil".
Justice Minister Michael Keenan said the impacts "could have been catastrophic".
"I understand that Australians will feel very unnerved about hearing this news and the police allege that we have been the target of a very serious ISIL plot," he told reporters.
"But I do want to remind everyone that this is the 13th time, because of the excellence of our law enforcement agencies, that we have been able to stop a terrorist attack from occurring on Australian soil in the past three years."
Khaled Khayat, 49, and Mahmoud Khayat, 32, have been charged with two counts of "acts done in preparation for, or planning, a terrorist act". They face life imprisonment with their case back in court on November 14.
One of the four has been released without charge and another is still being questioned.