Australia's biggest terrorism trial started on Wednesday, with 12 Muslim men appearing in court charged with being members of an unnamed terrorist organisation planning violent jihad in Australia.

The 12 men faced charges of preparing to use explosives or weapons for an undisclosed terrorist act, with the intention of coercing a government or intimidating the public, said the charge sheet in the Victoria state Supreme Court.

"The action or threat of action was to be done or threatened with the intention of advancing a political, religious or ideological cause, namely the pursuit of violent jihad," it said.

The group's spiritual leader, who praised al Qaeda leader Osama bin Laden as a "great man", had told the men that killing women and children was permissible, said the prosecutor.

Spiritual leader Abdul Nacer Benbrika, 47, said in taped telephone calls with another man that a bombing where the maximum loss of life could be inflicted, such as at football ground, was a suitable suggestion, said prosecutor Richard Maidment.

Maidment said that Benbrika had taught the group that it was "permissible to kill women, children and the aged", Australian Associated Press reported from the court.

"The organisation was exclusively male and exclusively Muslim. Benbrika was its director and the leader of that group," Maidment told the court, which was under heightened security.

Maidment said Benbrika was also heard in a conversation saying that al Qaeda leader Osama bin Laden was a "great man".

But Maidment warned the jury that Islam was not on trial and that Benbrika's views did not reflect the true views of Muslims or of any other religious group.

The 12 charged are: Abdul Nacer Benbrika, Fadl Sayadi, Ahmed Raad, Aimen Joud, Abdullah Merhi, Amer Haddara, Shane Kent, Majed Raad, Hany Taha, Shoue Hammoud, Bassam Raad and Ezzit Raad.

All have pleaded not guilty.

The prosecutor told the court that each member of the group had particular skills, with one receiving paramilitary training, which included demolitions using explosives, at an overseas camp.

Maidment said that during a conversation with an undercover police officer who infiltrated the group, Benbrika asked if he could be shown how to make explosives using ammonium nitrate.

The undercover officer had told Benbrika he was an expert in removing tree stumps using explosives. "(Benbrika) asked how much was required to destroy a house. Benbrika then asked how much to destroy a larger building," said Maidment.

Benbrika also asked how to obtain up to 500 kg (1,100 lb) of ammonium nitrate and how much it would cost, he said.

The prosecutor said police seized material, including literature on how to make bombs and video tapes with messages from Osama bin Laden.

More than 25 barristers and solicitors are representing the 12 men at the trial, which is expected to go for nine months.