National police chief General Timur Pradopo confirmed that one man had been shot dead in central Java in the morning, and three more were killed late in the evening when officers stormed a house in the west Java capital, Bandung, after an hours-long stand-off.

Four more men were arrested, all from the same terror cell, he said, after raids in seven locations around the country.

General Pradopo defended Densus 88, which has gained a reputation for being content with killing rather than capturing suspects.

He said the heavily-armed officers had tried negotiating with the men in the Bandung house for 3 1/2 hours, but the reply was "explosions, gunfire and bombs".

Ultimately three suspects were shot dead at the house and two captured. General Pradopo said they had found a number of pipe bombs as well as three pistols in the house where the men had lived for about four months.

West Java police spokesman Martinus Sitompul said the Bandung group was part of a small but broad terror network with bases in towns around the nation, which had been involved in several robberies.

In central Java, the dead man was Abu Roban, the alleged leader of the group. The other man, Sugiyono, had been involved in a bombing late last year, and the robbery of a jewellery store — a common method of funding jihad, or holy war.

Security expert Yohanes Sulaiman told Fairfax Media that the old terror network of the Bali bombings had been fractured by ruthless police work and decimated by arrests.

However, their spiritual leader, Abu Bakar Bashir, was still influencing young people with his fiery speeches from the jail where he's serving 15 years for terror-related offences.

Mr Sulaiman said a talented new jihadist preacher, Aman Abdurrahman, who was linked to Bashir, was inspiring a new and widely dispersed generation of young radicals who were "desperate to do jihad".

"If you look at the strand (of ideology) most comes from Abu Bakar Bashir — but the new terrorists are not part of the old network," he said.

"The young people got influenced and they figure they must do quick holy war."

However, they had not so far developed the discipline, training or networks to mount large-scale attacks.

Last Friday, police stopped an attempted pipe-bomb attack on the embassy of Myanmar, which was apparently prompted by Bashir's call for jihad against the Buddhist majority country for its ethnic cleansing of muslim Rohingyas.

General Pradopo said it was unclear yet whether the latest arrests are related to that incident.