All seven men arrested in Sydney's south-west on Thursday have now been released, NSW Police say.

It comes as Intelligence sources confirmed one of the men arrested in the dramatic vehicle interception in Sydney's south-west was under investigation by the Australian Security Intelligence Organisation (ASIO).

The men were arrested after tactical police rammed a car in Liverpool on Thursday, in what is being characterised as a precautionary measure following the Bondi terror attack that claimed 15 lives.

NSW Police Commissioner Mal Lanyon on Friday said the men, from Victoria, will continue to be monitored while in New South Wales.

Authorities earlier on Friday said they would have to release them if they did not find sufficient evidence to continue detaining them.

NSW Police have now confirmed the men — aged between 19 and 24 — have been released from custody and there was no immediate risk to the community.

'Here for a holiday'

Speaking to reporters after their release, one of the men said there had been a "misunderstanding" and the group held no extremist beliefs.

"We just told [police] we were here for a holiday," he said.

He rejected suggestions the group were angry at police following the incident.

"They have their job to do," he said.

"I don't blame them for nothing. It was a misunderstanding."

Another man rejected claims the group had plans to go to Bondi Beach.

"No, why would we go there? Too much headache … it was too far from where we were anyway," he said.

'Extremist' ideology examined, police say

Commissioner Lanyon said Bondi may have been one of a number of locations the men had intended to go to, but the reason for attending is unknown.

"The actual motive or the likely potential violent attack is unknown but we were not prepared to take any risk," he said.

"We’re certainly looking at radical Islamic extremism as one of the ideologies behind these males."

He said there was no confirmed link between the group and the Bondi gunmen.

Commissioner Lanyon said the response to the information received about the men had been prompt.

"Based on that information we had a risk that we did not believe that we could tolerate," he said.

"We won't accept violence, and what you saw was a very prompt and very firm response by the NSW Police."

ABC News understands there was no intelligence about an active threat.

Police said the men had travelled from Victoria and officers acted over concerns "a violent act was possibly being planned".

Tactical police rammed two cars the men were in and officials say there is "some indication" Bondi was one of the locations the men planned to visit.

'Weren't going to take any chances'

Earlier, one of the force's most senior officers, Deputy Commissioner David Hudson said investigators believed the group had "extremist Islamic ideology" and may have been en-route to Bondi.

Deputy Commissioner Hudson said the only weapon found was a knife.

Speaking to 702 ABC Radio Sydney on Friday morning, Deputy Commissioner Hudson said the men were known to police.

"We have some indication that Bondi was one of the locations they might be visiting yesterday but with no specific intent in mind or proven at this stage," he said.

Asked if the men had links to "extremist Islamic ideology", Deputy Commissioner Hudson replied: "That's our belief at this stage, yes".

The men were detained under rarely used terrorism and national security legislation that allows law enforcement to detain and question suspects for up to a week before laying charges.

Deputy Commissioner Hudson said tactical officers acted "before they had the ability to obtain any further capability".

"We made the decision that our tolerance for risk and threshold for risk is, as you can understand, very low at the moment following last Sunday's atrocities.

Vision from the scene showed handcuffed men face down on the ground, while later they were seen sitting on the floor facing a fence as heavily-armed police and riot squad officers stood behind them.

NSW Police said it will would work closely with Victorian and federal law enforcement partners.