A Batemans Bay man found with extreme right-wing and anti-government material had been in the early stages of planning a terror attack, NSW police say.
He was arrested by the NSW Joint Counter Terrorism Team on Friday, in the second arrest on the NSW south coast this week.
Joshua Bruce Lucas faced Nowra Local Court on Monday where he did not apply for bail and it was formally refused.
It's alleged the 21-year-old Sanctuary Point man had been planning to purchase military equipment, including guns to make an improvised explosive device.
NSW police said the 23-year-old Batemans Bay man had been arrested outside Nowra Police Station almost a week ago - on Sunday, March 15 - after hunting knives and survivalist equipment had been found in the car he was driving.
"He was detained under specified time provisions of the Criminal Code Act 1995 (Cth) as members of the [Joint Counter Terrorism Team] conducted enquiries into his links to a 21-year-old Sanctuary Point man, who was charged with a terrorism offence on the same day," police said in a statement on Saturday morning.
"The Batemans Bay man was charged with one count of acts done in preparation for, or planning, terrorist acts, on Friday, March 20."
Police said they would allege in court that the 23-year-old man had been involved in early-stage planning and preparation for a terrorist act.
"It will further be alleged he was working with the Sanctuary Point man to acquire military equipment, including firearms and other items capable of making improvised explosive devices," police said.
"During a search of the man's Catalina home, police seized electronic items, hunting knives, survivalist equipment and a replica firearm.
"An initial forensic examination of the electronic items uncovered a large quantity of extreme right-wing and anti-government material."
Police said they had seized other items that could be used to make a homemade bomb and other material during searches of other properties, at Sanctuary Point, Falls Creek and Tapitallee - all located near Nowra - between Thursday, March 19 and Saturday, March 21. Each location had possible links to the two men charged.
The 23-year-old man was expected to face Nowra Local Court later Saturday and police said investigations were ongoing.
They said anyone with information about extremist activity or possible threats to the community should come forward, no matter how small or insignificant they might think the information might be.
The national security hotline is 1800 123 400.