Bali bombers 'wanted to attack Sydney Olympics'

Al-Qaida-linked terrorists wanted to attack the 2000 Olympics in Sydney but decided against it, a newspaper has claimed.

Jemaah Islamiyah, the terror group blamed for the October 12 Bali bombings that killed nearly 200 people, mostly Australian tourists, along with 32 Britons, selected and trained a team for the attack, the Singapore Straits Times said.

But the plan by Jemaah Islamiyah's alleged operations chief, Riduan Isamuddin, known as Hambali, was rejected by the group's Australian leader for unknown reasons, the newspaper said.

The nature of the planned attack is not known.

Members of the team that prepared for the attack allegedly included an Indonesian national who worked as a taxi driver in Sydney and an Australian Jemaah Islamiyah member, sources told the newspaper.

The regional al-Qaida-linked terror group established cells in Perth, Melbourne and Sydney in 1996, the report said.

The report comes two days after Australian Prime Minister John Howard said Australia should have the right to launch pre-emptive military strikes against terrorists in other countries.