But he's warned the arrest of four men of Somalian and Lebanese descent on Tuesday shouldn't lead to people judging others on the basis of their ethnicity.

 

"Australians will be concerned to hear about arrests of this nature in our midst," Mr Rudd told reporters in Cairns.

 

"The threat of terrorism is alive and well. (But) our assessment of the terrorist threat in Australia is that it comes from a small number of individuals, who should in no way be taken as a wider reflection of any group within Australian society."

 

The prime minister said it was clear there was "an enduring threat from terrorism at home here in Australia as well as overseas".

 

However, there was no need to upgrade the national counter-terrorism level from medium - as it's been since the September 11, 2001 attacks in the United States.

 

The nation's law enforcement and intelligence agencies were working hard to combat any threats, Mr Rudd said.

 

The radical Islamist group that allegedly planned to attack the Sydney military base has links to al-Qaeda.

 

Police say the little known al-Shabaab group was deep into planning what would have been the most elaborate attack on Australian soil.

 

Al-Shabaab is not listed as a terrorist group in Australia but has been in the US since February 2008.

 

Clive Williams, from Macquarie University's Centre for Policing, Intelligence and Counter Terrorism, says members of the al-Shabaab group were likely to have been influenced by al-Qaeda's global message to attack western governments that had been involved in the US-led war in Afghanistan.

 

"There are obviously young people among our Muslim community ... who feel they can't agree with our foreign policies and the best way of changing them is mounting attacks in Australia," Prof Williams told AAP.

"The reason for targeting military bases was because of our military involvement in Afghanistan."

 

But Mr Rudd dismissed any suggestion Australia should withdraw its troops from Afghanistan because their presence inspired hatred.

 

"The government of Australia's view and (that of) the government of the United States, and our friends and allies, is that Afghanistan cannot be surrendered as a training base of unlimited potential for terrorists as it was prior to 2001," the PM said.

 

Opposition Leader Malcolm Turnbull says discovering an alleged terror plot in Australia's own backyard is "a very great concern".

 

"The fact the alleged target was our own military personnel who defend our nation under our flag, wearing our uniform, is also very disturbing," Mr Turnbull told reporters in Sydney.

 

He joined Mr Rudd in calling for calm and tolerance in the community.

 

Liberal senator Russell Trood says Tuesday's arrests underscore the need for Labor to release its terrorism white paper.

 

The Rudd government announced the white paper's "upcoming release" in December, Senator Trood said, but it was yet to see the light of day.

 

"It is worrying to think that almost two years since it was elected, this government's foreign policy is still premised on a national security architecture that is not designed to deal with such an enormous and complex problem," he said in a statement.

 

By Julian Drape and Stephen Johnson