Khaled Merhi, 39, was released from police custody on Sunday afternoon, after being charged with possessing a prohibited weapon.

He was driven away from Surry Hills police station about 4.30pm, just hours before a special order to hold him for seven days for questioning expired.

Mr Merhi will face court later this month.

He has not been charged over the alleged terror plot to target planes by placing an explosive or toxic gas in checked luggage.

Khaled Mahmoud Khayat, 49, and his brother Mahmoud Khayat, 32, were charged on Thursday with two counts each of acting in preparation for or planning a terrorist act, which carries a maximum penalty of life imprisonment.

Abdul Merhi was released on Thursday night without charge.

The Australian Federal Police last week said one plot was abandoned at the last minute on July 15, after an improvised explosive device was taken as far as the international terminal at Sydney Airport.

The bag containing the explosive device packed inside a meat mincer did not reach the plane after a query about its weight at the check-in desk.

It is alleged another plot was being planned when the raids were carried out last weekend. The plots were arranged by an Islamic State operative in Syria who sent bomb components to Australia in air cargo, police said.

International intelligence agencies intercepted communications from the operative.

AFP Deputy Commissioner Michael Phelan on Friday described the July 15 plot as "one of the most sophisticated plots that has ever been attempted on Australian soil".

"With assistance from the IS commander, the accused assembled the IED ... into what we believe was a functioning IED to be placed on that flight," Mr Phelan said.

"At no stage did the IED breach security."

The men were arrested in raids across the city, and homes in Surry Hills, Lakemba, Punchbowl, Wiley Park and Bankstown were searched through the week.

A joint press release from the Australian Federal Police and NSW Police said the investigation is continuing.

Fairfax Media