A multi-pronged counter-terror operation raided homes across Sydney, with one of the police actions shutting down a major Surry Hills thoroughfare amid unconfirmed reports of a “suspicious device” being found..

The NSW Joint Counter Terrorism Team also hit premises at Lakemba, Wiley Park and Punchbowl in the co-ordinated operation late on Saturday afternoon.

Four arrests were made.

A source has told the ABC the plot was believed to relate to a possible attack on a domestic passenger flight, but it is also understood that police have not yet determined how far the alleged plot had progressed or even if the alleged threat was credible.

“This activity relates to an ongoing investigation,” a police spokesman said.

Inner-city Cleveland Street in Surry Hills was closed in both directions  between Elizabeth and Crown streets due to the police operation, the Transport Management Centre said.

“The safety of the community and police members are the primary consideration during this activity,” the police spokesman said.

Motorists were advised to avoid the area and residents had to show ID before being allowed to approach their homes.

Cleveland Street was sealed off during the Surry Hills police operation.

“The police grilled me before letting me cross the line and go to my house,” said a young musician, who declined to give his name.

“It wasn’t just my beard that made me a target,” he joked, “because they were questioning everyone.

“Then, when I saw the SWAT cops with guns and helmets, I knew they weren’t just doing it for fun.”

The Seven Network reported 40 riots squad officers stormed the Surry Hills terrace where the police explosives team is said to have found a suspicious device.

TV footage shows a man with a bandage on his head and draped in a blanket being led away by authorities.

A woman, who told the ABC her son and husband were arrested in that Surry Hills raid, denied they had any links to terrorism.

“I love Australia,” she said as she was led away to a car.

Police lead a woman from the raided terrace house in Surry Hills.

The Prime Minister’s Office released a statement saying the operations were “designed to disrupt and prevent plans to undertake terrorist attacks in Australia”.

“I have been kept closely briefed on the progress of the operations by the heads of our relevant security agencies,” Mr Turnbull said.

“However, as the operations are ongoing, it is inappropriate to provide further detail at this stage.”

-with AAP and ABC