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NSW man arrested over fake terror hit list

The brother of Australian cricket star Usman Khawaja is set to be charged after he allegedly used fake documents containing a terror plot to kill senior politicians to "set up" his colleague over a personal grievance.

The 39-year-old, named in multiple media reports as Arsalan Khawaja, was arrested on Tuesday as part of an ongoing Joint Counter Terrorism Team investigation.

The documents, which allegedly set out attacks targeting former prime minister Malcolm Turnbull and other MPs including Julie Bishop, were found at the University of NSW in August.

The man has been taken to Parramatta police station, where he is in the process of being charged with attempting to pervert justice and forgery.

"We believe that this was planned and it was calculated," Assistant Commissioner Mick Willing told reporters in Sydney on Tuesday.

"We have no information to suggest that there is any ongoing threat to the community arising from our inquiries into the matter."

The arrest comes about three weeks after charges were dropped against a Sri Lankan man, 25, who was wrongly accused of creating the documents.

Mohamed Kamer Nilar Nizamdeen, who has returned to Sri Lanka, plans to sue for compensation after being detained in Goulburn's Supermax jail following his arrest in August.

The University of NSW contractor was charged with creating a document in connection with preparing for a terrorist act, and spent four weeks behind bars.

He was released on bail in late September.

Mr Willing said on Nizamdeen's arrest was regrettable but stopped short of apologising.

"We feel very sorry for him and what was happened to him but what we will be alleging is that he was set up in a planned and calculated manner," he told reporters in Sydney.

"Motivated, in part, by a personal grievance."