The Sydney arm of an alleged Islamic terror network had stockpiled enough chemicals to make at least 15 large bombs, a newspaper reported Thursday, as police sifted through evidence seized in pre-dawn raids earlier this week.

The eight suspects, arrested in Sydney Tuesday and charged with conspiracy to manufacture explosives for a terrorist attack, had registered a series of company names to justify buying large quantities of industrial chemicals, The Sydney Morning Herald newspaper said, citing unidentified investigators.

The report said the group needed only common household chemicals available at local hardware stores to replicate the type of bombs used in the July 7 suicide attacks on London's public transport system that killed 52 people and the four bombers.

Federal Police Commissioner Mick Keelty cast doubt on the report, but Attorney-General Philip Ruddock confirmed bomb ingredients were seized in the raids.

"My understanding of the evidence is that some of the product had been actually purchased, others had been ordered," Ruddock told ABC radio. "The intelligence assessment is that this was an enterprise designed to manufacture a very large quantity of explosives."

Federal lawmakers were expected to begin debating Prime Minister John Howard's proposed new anti-terrorism laws during Thursday's sitting of parliament.

The legislation, which has met with opposition from legal and civil rights groups, would let authorities hold terror suspects without charge for two weeks and monitor them with electronic tracking devices for up to a year.

The proposed laws also toughen jail terms for inciting race hatred or violence against the community, but have been criticized as an attack on free speech.

The debate comes as investigators continue to examine evidence seized in Tuesday's raids, in which 17 people were arrested and police said they had foiled a "catastrophic" attack on Australian soil.

Victoria state Police acting Deputy Commissioner Noel Ashby said Wednesday that police and security agencies were examining evidence -- including computers, documents and chemicals -- and may file more charges against nine men arrested in Melbourne and eight in Sydney.

Prosecutors said the Sydney and Melbourne terror cells were led by Algerian-born firebrand cleric Abu Bakr, 45, who was among those arrested. He made headlines earlier this year by calling Usama bin Laden a "great man," and saying he would be violating his religious beliefs if he told his followers not to travel to Iraq to join the insurgency.