Australian police have named a Muslim cleric as being the spiritual leader of a group of 16 men arrested on suspicion of terrorist acitivities on Tuesday morning in Sydney and Melbourne.

Abu Bakr whose full name is Abdul Nasser Benbrika was among the nine men arrested who appeared on Tuesday morning in Melbourne Magistrates Court. He has been charged with directing the activities of the terrorist organisation.

The self-styled leader of a fundamentalist Islamic group in the suburbs of Melbourne, Abu Bakr made headlines in August after he praised Osama Bin Laden for the September 11 attacks.

Abu Bakr, who is thought to have attended militant training camps in Asia and had his passport confiscated in June has denied the charges.

"I am not involved in anything here. I am teaching my brothers here the Koran and the Sunna, and I am trying my best to keep myself, my family, my kids and the Muslims close to this religion," he told ABC radio.

"Jihad is part of my religion and what you have to understand that anyone who fights for the sake of Allah ... (with) the first drop of blood that comes from him out, all his sin will be forgiven," he said.

"The members of the Sydney group have been gathering chemicals of a kind that were used in the London Underground bombings," Maidment said, adding that Bakr was the group's ringleader.

"Each of the members of the group are committed to the cause of violent jihad," he added, saying they underwent military-style training at a rural camp northeast of
Melbourne.

One of the suspects was shot down by police after he opened fire on them, said police Commissioner Graeme Morgan. The suspect is in hospital having an operation on a neck wound but there was no further information available on his condition.

All nine men have been remanded in custody until 31 January.