Video grab shows man being led into a cell after being arrested in Sydney (Reuters)

Australian Muslims, on their part, fear that the Tuesday's arrests would fuel hate crimes against the Muslim minority, AFP said.

Waleed Aly, a spokesman of the Islamic Council of Victoria, said there had recently been an increase in the anti-Muslim hate crimes.

"Crimes range from people being spat on, to assaults, headscarves being ripped off. It's pretty horrible stuff," he said.

Keysar Trade of the Islamic Friendship Association echoed a similar concern, saying that talk-back radio had been "full of vitriolic comments about Muslims" after the Tuesday's arrests.

"This is what we're facing, it's certainly not an enviable position to be in," he told AFP.

Australian Muslim leaders, however, expressed hope that the arrests would ease suspicion of Muslims and give those charged a chance to defend themselves.

"I think what we're happy about is that there have finally been some arrests made and charges laid," Aly said.

"Because what's been really disconcerting in the past has been a series of raids that have amounted to nothing. That creates suspicion and that creates fear."

Muslims, estimated at 300,000, make up just 1.5 percent of Australia's population of 20 million.

Australian Muslims warned that the security measures create a climate of fear and apprehension among the Muslim minority in the country.

In a related development, terror analysts said the US-led occupation of Iraq has been the main cause of home-grown terrorists in Australia and other European countries.

"What we are seeing in Australia is jihadi (Islamic holy war) support cells in the process of mutating in the post-Iraq environment into attack or operational cells," Rohan Gunaratna of the Singapore-based Institute of Defense and Strategic Studies, was quoted as saying by AFP.

"There are at least four dozen Australians, mostly first and second generation Muslims, trained in Afghanistan and Pakistan who are today ideologically driven by the global developments in Iraq," he added.

Robert Broadfoot of the Hong Kong-based Political and Economic Consultancy said the July 7 attacks in London and earlier in Madrid also pointed to Iraq as a driving force behind "Islamic militancy".

"But it would be wrong to simply say it's because of Afghanistan and Iraq and the support of the US," he said.

"That's part of it but I think in the minds of many of these extremists Australia is an enemy in its own right -- it's not Muslim, it's identified culturally as more of a western country."

Australia, like Britain, is a close ally of the United States in its so-called "war on terror", and contributed troops to the invasions of both Afghanistan and Iraq.

Australia has never suffered a major peacetime attack on home soil, but 88 Australians were among 202 people killed in the 2002 Bali bombings and 10 Indonesians were killed when the Australian embassy in Jakarta was hit by a suicide bomb on September 9, 2004.