The raids, conducted by the Sydney Joint Counter Terrorism team, took place in Surry Hills, Lakemba, Wiley Park and Punchbowl on Saturday afternoon.

The operations are part of an ongoing investigation. 

Fairfax Media understands the raids relate to a terrorist cell and a bomb plot to bring down an aircraft. The raids were not planned but instead were a rapid response to information about the plot received by police. 

Four men have been taken into custody and the searches at the properties are expected to go late into the night. The man who was arrested in Surry Hills emerged with blood on his head and was taken to hospital by paramedics.

"These searches and the broader investigation remain ongoing, and further information will be made available at the appropriate time," the AFP said in a statement.

"Members of the public are urged to follow any instructions they receive from police at or in the vicinity of search locations."

The police operations commenced around 1pm on Saturday afternoon with police shutting down a large stretch of Cleveland Street. 

The bomb squad attended the scene of the Surry Hills raid on Cleveland Street, which was re-opened after several hours.

Channel 7 reported that police found a suspicious device in a house there.

Police entered the house from both the front and the back, with a number of officers entering from Goodlet Lane. 

The officers used force while entering, with a section of the house's back fence collapsing during the raid.

The family who lived in the raided house on Cleveland Street have been described as "perfectly nice and normal people" by a neighbour whose property backs onto theirs.

"We knew them to say hello to and they seemed nice," the woman in her early 30s, who didn't want to be identified, told AAP. An elderly couple lived in the home, the neighbour said, and they had adult children.  

The neighbour came home while the raid was underway and said there were "heaps" of police at the scene.

The Lakemba raid took place at a home on Sproule Street, not far from Lakemba Station. 

Prime Minister Malcolm Turnbull said in a statement he had been "closely briefed" about the operation, which involves the AFP, ASIO and the NSW Police.

"These operations are designed to disrupt and prevent plans to undertake terrorist attacks in Australia," Mr Turnbull said.

"I have been kept closely briefed on the progress of the operations by the heads of our relevant security agencies.

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

Mr Turnbull said his number one priority is the safety and security of all Australians. 

"The public should be reassured that our security and intelligence agencies are working tirelessly to keep us safe."

The AFP are asking members of the public to follow any instructions they receive from police.

"Members of the public are urged to follow any instructions they receive from police at or in the vicinity of search locations," a statement read.

"The community should continue to go about their daily business and report any suspicious activity to triple zero, Crime Stoppers on 1800 333 000 or the National Security Hotline on 1800 123 400."