Australian cricketer Usman Khawaja's brother Arsalan Khawaja has been accused of framing another man over fake terror plot. As per the reports, he was trying to set up his former university colleague Mohamed Kamer Nizamdeen, by convincing police that the 26-year-old was part of a plot to kill then prime minister Malcom Turnbull.

Arsalan was arrested in suburban Sydney on Tuesday and is being questioned over allegations he attempted to pervert justice by making a false document, which listed high-profile targets.

Nizamdeen endured more than four weeks in solitary confinement after he was arrested on terrorism charges. Police had accused him of plotting the attacks in his notebook but it was later found out that the handwriting didn't match.

Nizamdeen is now seeking compensation from the authorities for his wrongful detention. He has returned to Sri Lanka. 

"What we will be alleging is that he (Nizamdeen) was set up in a planned and calculated manner. Motivated, in part, by a personal grievance," New South Wales assistant commissioner Mick Willing told reporters.

"In relation to the charging and the subsequent dropping of the charge against the Sri Lankan citizen, we have offered, and have paid his court costs," Willing added. "We regret the circumstances which led to him being charged and the time he subsequently spent in custody."