The attackers planned to focus their assault on the Aug. 17 Independence Day ceremony attended by President Susilo Bambang Yudhoyono and other Indonesian and foreign dignitaries, national police chief Gen. Bambang Hendarso Danuri told reporters.
"They were confident that all state officials and dignitaries would be there," Danuri said. "Killing all the state officials would have accelerated the transition from a democracy to a state controlled by Islamic Shariah law."
Indonesia, which has the world's largest Muslim population, stipulates religious freedom in its constitution.
News of the terrorist plot comes just weeks before President Barack Obama was expected to visit Indonesia in June after postponing a trip earlier this year.
The plot also included taking over hotels and killing foreigners, especially Americans, in a commando-style assault similar to that on India's financial capital Mumbai that left 166 people dead in November 2008, he said.
Police and military targets were also chosen in Aceh province, Danuri said
"Their plan was also to launch attacks in Jakarta against foreigners - especially Americans - and attack and control hotels within certain communities, imitating what happened in Mumbai," he said. "If we had not detected them and their military training had been successful, then they would have assassinated foreigners."
Details of the planned attacks were revealed during interrogations of dozens of suspects arrested in a series of raids since February, when authorities broke up a training camp run by new terror group al-Qaida in Aceh.
Police believe the group's top leaders are among the 58 suspected militants in custody. In addition to the arrests, police have seized a large supply of assault rifles, thousands of rounds of ammunition and jihadist literature.
It is the second alleged plot within a year against the Indonesian president. Police said last August they had evidence of a plan to assassinate Yudhoyono by detonating a car bomb close to his motorcade.
Indonesia has battled Islamist militants with links to al-Qaida since 2002, when extremists bombed a nightclub district on Bali island killing 202 people, most of them foreigners. Since then, a much-praised regional security crackdown has seen hundreds of militants killed or captured and convicted, but they have proved to be a resilient foe. The last major attack was in July 2009 when suicide bombers targeted luxury hotels in the capital Jakarta.
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Associated Press writer Irwan Firdaus contributed to this report.
