A 22-year-old south-west Sydney man arrested during the anti-terrorism raids allegedly conspired to commit a "horrifying" terrorist act with a man believed to be the most senior Australian Islamic State leader, court documents and Commonwealth prosecutors have revealed.

Omarjan Azari, from Guildford, appeared in Central Local Court charged with preparing to commit a terrorist act, with the prosecutor stating that the plan involved the "random selection of persons to rather gruesomely execute".

Documents before the court show that Mr Azari is accused of conspiring with Mohammad Baryalei and others to carry out the plan.

Fairfax Media has confirmed that this is the same Mohammad Baryalei who was recently identified in an ABC TV investigation as the most senior member of ISIL in Australia.

ABC's 7.30 program reported that Mr Baryalei, 33, has recruited at least half of the 60 Australians currently fighting with ISIL and has a trusted position in the operational command of the al-Qaeda-linked group.

It also reported that he has worked as a security guard in Kings Cross in Sydney, and was also an aspiring actor, appearing in the television series Underbelly: The Golden Mile.

Mr Azari, 22, from Guildford in Sydney's west, appeared briefly in the dock before his barrister requested that he be taken back down to the cells.

Mr Azari appeared in court wearing a dark fleece jumper and seemed uncomfortable with the many sets of eyes staring in his direction before being taken away.

Commonwealth prosecutor Michael Allnutt told Central Local Court that the allegations against the accused were "very, very serious" and involved "an unusual level of fanaticism" such that he could not be relied upon to "meet any court order".

He said that Mr Azari was part of a plan earlier this year to commit an "extremely serious offence" which was done "with the knowledge of police surveillance conducted at that time".

The court heard the evidence took the form of an intercepted phone call between May 8 and September 18 to which Mr Azari was a party.

It is from that call that Mr Azari is accused of conspiring with others, including Mohammad Ali Baryalei, to plan or prepare a terrorist act.

Mr Allnutt said: "There was a clear imperative to commit an act to shock, horrify and terrify the community as a whole."

He said Mr Azari had access to cash and the matter involved "an unusual level of fanaticism".

Mr Allnutt said the immediate catalyst for Mr Azari's arrest was a phone call that took place "only a couple of days ago".

"There's been an immediate reaction to a clear and imperative danger," he said.

This reaction was a reference to the raids across Sydney and Brisbane.

But the accused's barrister, Steven Boland, said "the allegation is based on one phone call of very limited compass that federal police have put forward".

Mr Boland, hired by Legal Aid NSW to represent Mr Azari, did not apply for bail on behalf of his client, and bail was thus automatically refused.

The matter will return to court in six weeks.