Australian Prime Minister John Howard said security forces were closely watching suspected militants in the nation's two biggest cities, some of whom had trained with known terrorist groups abroad.

Howard said no action had been taken because the suspects had not broken any laws their training took place before Australia beefed up its anti-terrorism laws in the wake of September 11.

Howard confirmed the Australian Security Intelligence Organisation (ASIO) had them under close watch.

"There is no revelation that there are some people in this country who trained overseas with terrorist organisations.

"At the time they did so, that wasn't a criminal offence and I think it's very important that we bear that in mind," Howard told reporters.

"ASIO ... has informed me that those people who are regarded as a threat, or regarded as an interest, they are under very regular surveillance," he said.

Australian Federal Police Commissioner Mick Keelty earlier backed comments by a former ASIO officer that up to 60 suspected militants were based in Sydney and Melbourne.

"We are focused on the people who we are aware have trained overseas. We are focused on the people who we know have a propensity to do something wrong," Keelty told Australian Broadcasting Corp radio.

Asked to confirm the 60 figure, Howard demurred.

"I would be cautious about fixing on particular numbers," he said.

Australia sent troops to Iraq and Afghanistan and has been on a medium level security alert since the 2001 attacks on the United States. But Australia has never suffered a major peacetime attack at home.

The security and anti-terrorism laws put in place since 2001 include giving police and intelligence agencies more power to detain and question suspects or people suspected of knowing about future attacks.

Keelty said police were discussing further reforms of anti-terrorism laws with the Attorney General's Department, but gave no further details.

Former ASIO officer Michael Roach told ABC television that suspected militants living in Australia had been trained in explosives and reconnaissance.

"The threat is real. It's a matter when will this happen," Roach said.

GUANTANAMO
Prosecution will call witnesses against Hicks

US prosecutors will call witnesses to testify against an Australian terror suspect at Guantanamo Bay, Australia's attorney-general said in an interview published yesterday, in a move which has surprised defence lawyers.

Former kangaroo skinner David Hicks, 29, is due to stand trial at the US naval base in Cuba within weeks on charges including that he attempted to murder coalition troops as a Taliban fighter in Afghanistan.

Defence lawyers had expected the prosecution to rely on written statements from interrogations with other Guantanamo Bay detainees many of whom have already been released and would not be available for cross-examination perhaps made under duress and containing hearsay evidence.

But Attorney-General Philip Ruddock said he had been assured by prosecutors during a recent trip to Washington that witnesses would be called and the trial would be fair. "They do have witnesses," Ruddock told The Sydney Morning Herald newspaper. "It's not dependent on hearsay and they will be able to adduce substantial evidence," he added.

- AP