The men were apprehended Wednesday during dawn raids on their homes by officers from the Joint Counter Terrorism Team (JCTT), as part of their ongoing anti-terror campaign known as "Operation Appleby."
A 24-year-old man from the western suburb of Merrylands has been charged with one count of collecting or making documents likely to facilitate terrorist acts, a NSW statement said. He faces up to 15 years in prison.
A 20-year-old man from Bankstown in southwest Sydney was charged with one count of conspiracy to commit acts done in preparation, or planning terrorist acts.
The charges also relate to materials seized during another Operation Appleby raid in December 2014. He faces a maximum sentence of life in prison if convicted.
Five other men were charged with the same offense on December 10, also in relation to the same documents, the police statement said.
Navy base targeted
The Australian Broadcasting Corporation (ABC) quoted Deputy NSW Police Commissioner Catherine Burn as saying there was no specific threat to the community but that a naval base was among the locations the suspects had discussed.
"In there, Woolloomooloo naval base was one of the locations that were discussed, but there wasn't a specific place identified," Burn said, referring to the Royal Australian Navy's Sydney facility at Garden island.
She said the police investigation disrupted the planned terrorism plot.
A total of 12 people have been charged with a total of 38 terror-related offenses in relation to Operation Appleby since September 2014, NSW police said.