Mr Azari is accused of helping to plan a terrorist act in a phone call with Mohammad Ali Baryalei, allegedly Australia's most senior member of the terrorist group Islamic State, who was believed killed while fighting in northern Syria in October.

"What you guys need to do is just pick any random unbeliever,"  Baryalei allegedly said during the phone call in September last year. "When finished put the flag of the state in the background and film it and send it off."

On Thursday, Justice Peter Garling​ ordered the Crown to provide any material or evidence to show why Mr Azari had been given the state's highest security classification - AA - and a cell at Goulburn Correctional Centre's High Risk Management Unit when he is awaiting trial, which could still be a year away.

In applying for bail, Mr Azari's barrister Winston Terracini, SC, said his client had been in custody for almost 12 months since he was arrested at his home at Guildford in Sydney's west, during the largest counterterrorism operation in Australia's history.

The raids came three days after the intercepted phone call between Mr Azari and Baryalei.

Mr Terracini said Mr Azari became the first person to be held on remand in Supermax. A second accused terrorist, Sulayman Khalid, has since been placed in the facility.

"All of the other [inmates] are persons of ill-repute that have been sentenced to life or very similar sentences," Mr Terracini said.

Supermax inmates are banned from speaking Arabic and, as his parents have little English and his English-speaking sister is prohibited from visiting, Mr Azari is "verging on being isolated", Mr Terracini said.

Legal visits are much more restricted than for ordinary remand prisoners, which has and will continue to make preparing the defence case very difficult, he said.

In adjourning the bail hearing to September 3, Justice Garling said: "I am particularly concerned that any person on remand is unable to have free and effective access in substance to their lawyers to prepare a defence."

Justice Garling told Crown Prosecutor Peter Neil, SC, it would assist his decision on bail if the Commonwealth DPP could provide "any evidence or material relevant to the bail application as to whether there is good reason in this applicant's case for the conditions under which he is being held to apply to him".

Mr Azari, appearing via video link, refused to speak to confirm he could hear Justice Garling or to confirm his identity, instead nodding his head.

Justice Garling said it was a "unusual situation" and questioned why he should even hear the bail application.

However, Mr Terracini said that, as Mr Azari was legally represented, there was no reason why the proceeding shouldn't go ahead.

Mr Azari is charged with conspiracy to murder and knowingly making funds available to commit a terrorist act.

A charge of conspiracy to commit a terrorist act has been withdrawn and replaced by a charge of "doing acts in preparation to commit a terrorist act".

Mr Terracini said the Commonwealth Director of Public Prosecutions had applied to Chief Justice Tom Bathurst to have Mr Azari's case bought up from the District Court to the Supreme Court because "they apprehend novel legal issues arising".

He said there were already 37 volumes of material, yet Mr Azari had won only a very limited grant of legal aid.

Both he and instructing solicitor Steve Boland were largely working pro bono, he said.

Much of the evidence is intercepted telephone calls in which English, Arabic and an Afghan dialect are spoken.

The original translation of a phone call between Mr Azari and Baryalei said the two talked about "abandoning" the terrorism plan so as to avoid detection by the authorities.

Mr Terracini said a second, official translation now reads "postpone" rather than "abandon".

The court heard there was also an issue as to Mr Azari's age - he is either 20 or 23.

Mr Azari gave up thumbs-up when Justice Garling asked him if he understood the hearing was being adjourned.

In July, the Supreme Court heard that Mr Azari's co-accused, Ali al-Talebi, 25, is also being held on remand in Supermax.

Mr al-Talebi is facing three charges of making funds available to terrorist groups.