Sydney standoff

The hostage situation comes after months of heightened tension over the threat of terrorism that has seen Australia's Terrorism Public Alert level posted at "High," indicating that a terrorist attack is likely. Given the hostage crisis, it is likely this alert could be further increased in days to come.

State police have refused to confirm the incident is an act of terrorism, while Australia's Prime Minister Tony Abbott has said the gunman is claiming "political motivation."

Security concerns in recent months have centred around the possibility of foreign fighters returning to Australia with new skills and a reinforced mindset.

In September, counter-terrorism raids saw over 800 armed police target homes in Sydney and Brisbane suburbs, with only one person being charged as a result.

Australian Foreign Minister Julie Bishop told parliament in October that 70 Australians were fighting with extremist groups including "Islamic State" militants.

Pre-planned attack?

Nick O'Brien, a counter-terrorism expert at Australia's Charles Sturt University, says that the offender's motivations cannot be known until police have interviewed him but that the hostage situation has all the hallmarks of a pre-planned attack.

"When you look at the spot, it's got distinct advantages. It's in the city center so you know you'll shut the city down. It's also a soft target with no guards and perhaps no CCTV in the premises."

"There's a television station across the road so they can poke their cameras out the windows - you've got publicity. To me it seems like someone has been looking at it as a target and hasn't just walked in."

The Islamic State's magazine Dabiq recently claimed that the stabbing of an Australian police officer in Melbourne in September was the result of incitement by Islamic State leader Abu Bakr Al Baghdadi. Comparisons are being made to the brutal murder of British soldier Lee Rigby in London's Woolwich in 2013.

The Islamic community in Australia has been quick to express shock and condemnation at the news that the offender had brandished an Islamic creed.

Sign of solidarity

Australian Twitter users have employed the hashtag #Illridewithyou to spread a campaign of solidarity with Australian Muslims fearing attacks, offering to share a lift or provide company on public transport on the way to work.

More than 40 Australian Islamic groups have issued a statement condemning the cafe attack, while candelit vigils are being held at major mosques across Australia to pray for the safety of hostages.

The Grand Mufti of Australia has expressed support for the hostages and said that the offender's actions are entirely denounced in Islam.

O'Brien says the possibility of attacks against the Islamic community in Australia is "very real."

"What will happen depends on this particular situation. In the best-case scenario everyone will walk out unharmed besides the trauma of what they have endured. In the worst-case scenario where there are serious injuries or deaths, there's a strong chance there will be retaliatory attacks."

The unfolding security situation may galvanize support for Australia's government in the coming days and weeks. Voter disillusion around the government's unpopular budget has pushed the prime minister's popularity down to its lowest point this week.