IS Australia video 'not an escalation of threat' says government

A new video by the Islamic State group encouraging terror attacks in Australia is not a significant escalation of danger, the nation's justice minister has said.`

The propaganda footage contrasts tranquil Melbourne streets with scenes of chaos and war in the Middle East.

The video calls for home-grown attacks on prominent Melbourne sites including the airport and St Paul's Cathedral.

Justice Minister Michael Keenan said it did not represent an increased threat.

"All Australians and Victorians in particular should feel very confident that our efforts are doing what they're required to do and that is keeping our country safe from this fanatical terrorism organisation," he told the Herald Sun newspaper.

Counter-terrorism expert Greg Barton said the latest video was designed to appeal to someone in Australia.

"Putting Australian scenes in a propaganda video, someone in Melbourne, Sydney, will look at that and be tipped over the edge into trying to do something," he told the Seven Network.

Earlier this year, Prime Minister Malcolm Turnbull described the terror threat as "real" after IS called on followers to target prominent Australian locations.

Police last month arrested two teenagers in Sydney over an alleged IS-inspired terror plot.

Deputy Commissioner Catherine Burn, from New South Wales police, said the teens bought bayonets hours before their arrest.

It was the eleventh terror attack to be foiled by Australian police, she said.