(Reuters) - Australia raised its terror threat level to 'high' from 'medium' on Friday, saying there was an increased likelihood of a terrorist attack at home, despite stressing it had no knowledge of a specific attack plan.

Australia has repeatedly raised the alarm about the number of its citizens believed to be fighting with Islamic groups in the Middle East, including a suicide bomber who killed three people in Baghdad in July and two men shown in images on social media holding the severed heads of Syrian soldiers.

This is the first time Australia has issued a high alert.

David Irvine, the director general of the Australian Security Intelligence Organisation (ASIO) flagged the prospect of lifting the threat level on Tuesday, saying the number of Australians returning from fighting with Islamic State and other radical groups posed a growing risk.

"Last night the director general of security raised the terror threat to high, consequently today the government is raising the public awareness level to high," Prime Minister Tony Abbott said in a news conference in Melbourne.

"I want to stress that this does not mean that a terror attack is imminent. We have no specific intelligence of particular plots. What we do have is intelligence that there are people with the intent and capability to mount attacks here in Australia."

Australian police on Wednesday arrested two men suspected of helping Australian citizens fight alongside militants in Syria on terrorism-related charges.

Australia had been at the "medium" alert level since a four-tier system was introduced in 2003. A "high" alert level is used when officials believe an attack is likely, while a "severe" level threat means they believe an attack is imminent or has occurred.

Security agencies are aware of at least 20 people who had returned to Australia after fighting in the Middle East, posing a national security risk. Up to 160 people have either been involved in the fighting or actively supporting it, according to Australian officials.

The U.N. Security Council is planning to demand countries "prevent and suppress" the recruitment and travel of foreign fighters to join extremist militant groups like Islamic State by ensuring it is considered a serious criminal offence under domestic laws.

The United States circulated a draft resolution late on Monday, obtained by Reuters, to the 15-member Security Council and hopes it can be unanimously adopted at a meeting chaired by U.S. President Barack Obama on Sept. 24.