Security agencies in Germany are facing a serious situation as a new report indicates that members of the terror group Islamic State [ISIS] have slipped into Europe disguised as refugees.

Germany's domestic intelligence agency, BfV, disclosed of the development, which comes a day after security forces foiled a potential terror attack in Berlin, according to reports.

"We have repeatedly seen that terrorists ... have slipped in camouflaged or disguised as refugees. This is a fact that the security agencies are facing," BfV head Hans-Georg Maassen told ZDF television on Friday, Reuters reported.

He admitted that the New Year's eve mass sexual assault is not the worst his fellow citizens can expect. He told the Berliner Zeitung newspaper on Friday that BfV received more than 100 tips of ISIS terrorists among refugees.

"We are in a serious situation, and there is a high risk that there could be an attack," he said, adding however that security agencies, the intelligence services and the police authorities are "very alert" at this time, with the goal to minimise the risk "as best we can."

According to reports, two Algerian men suspected of training with ISIS have been arrested for attempting to launch an attack in Berlin. Two other men suspected of terrorist ties have yet to be formally taken into police custody.

One of the Algerians and his wife were arrested at a refugee home because they were reportedly sought by Algerian authorities.

Two months ago, a captured ISIS terrorist known only as "Harry S" had warned Der Spiegel of future terror attacks.

The 27-year-old told the magazine he wanted to "come clean" about what Germany can expect in the months and years ahead, according to reports.

Since the civil war broke out, German police have already been overrun with crimes linked to migrants from the Middle East and North Africa, including a slew of sexual assaults that took place on New Year's Eve. Over 100 women were victimised by migrants in Cologne, Bielefeld,

Earlier, Germans expressed they no longer feel safe in their home country and had been buying products for protection such as pepper spray, alarms, signal guns and specialty weapons.