The footage, released on November 7, contains confronting images of beheadings, corpses and missiles in the Middle East, before a shot of Melbourne's cityscape appears.

The scene is followed by a blast at a mosque and then images of Melbourne Airport and St Paul's, on the corner of Flinders and Swanston streets in the CBD.

Melbourne is the only Australian city to feature in the 20-minute video, titled The Impenetrable Fortress.

Police said they were aware of the video showing Islamist propaganda, but said it was unaware of any direct threats in Melbourne.

Victoria Police's counter terrorism command said the video was "similar in content" to material that had previously been released by Islamic State.

"While such materials are disturbing, Victoria Police is not aware of any direct threat to the Victorian community or infrastructure at this time," a spokeswoman said.

Islamic politics expert Professor Greg Barton said the footage was intended to encourage homegrown terror attacks.

"They're hoping, it would seem, by putting Australian scenes in a propaganda video, somebody in Melbourne or Sydney will look at that and be tipped over the edge into trying to do something," the Deakin University academic told Seven News.

Australia's terror threat warning level has remained at "probable" since late 2014, indicating that terror groups or individuals have the required intent and capability to conduct a domestic attack.