A radicalised Melbourne teenager who had bomb-making materials under his bed has admitted preparing for a terrorist act.

Police say they found manuals titled “Pressure Cooker Backpack Bomb with Switch Detonator” and “Make a Bomb in the Kitchen of your Mom” on encrypted computer software owned by the 17-year-old.

The teenager pleaded guilty on Monday to a single charge of engaging in an act in preparation for, or planning, a terrorist act between April 25 and May 8 this year.

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He had supporters in the Children’s Court, including a woman who cried as he looked down and quietly replied “guilty” when asked how he wished to plead.

Prosecutors dropped two other charges against the teenager.

He was arrested on May 8 after police raided his family’s home.

Prosecutors have previously said the threat posed by the teen was one of the closest Victoria has ever come to a terrorist attack.

Investigators say he was planning to make improvised explosive devices using items he had gathered from hardware and kitchen stores.

Police found steel pipes fitted with caps and boxes of screws under the teen’s bed, court documents say.

He bought a pressure cooker at the end of April, telling a kitchen store clerk it was for his mother.

Police say a search of the teenager’s social media accounts revealed extremist ideology and support for politically-motivated violence, as well as interaction with pages run by Islamic State.

His phone had allegedly been used to view an IS propaganda magazine, including an issue which encouraged more of the Australian attacks carried out by Man Haron Monis and Numan Haider.

One of many handwritten documents found in the boy’s possession said: “Rise, O soldiers, the Islamic State is calling you. Come to it and fight its enemies the criminals.”

He will front a directions hearing in a County Court on Thursday.

The matter was expected to be heard in the Supreme Court, after prosecutors won a bid to uplift the case from the Children’s Court jurisdiction.

The Children’s Court can only impose a maximum penalty of three years, while the Supreme Court has the ability to hand down life in jail.

“The Supreme Court has indicated it ought to be heard in the County Court,” a prosecutor said on Monday.

“This all happened fairly recently.”

Prosecutors dropped two charges, including possessing things connected with a terrorist act and failing to provide a password.

The young man did not apply for bail and was remanded in custody.

-AAP