Australian police have seized a record half a tonne of the drug crystal methamphetamine and heroin worth up to $525m hidden in a shipment of terracotta pots from Thailand.

Four Hong Kong nationals and three Australian residents were also arrested in raids in Sydney on Monday following a tip-off from the US Drug Enforcement Administration (DEA).

Over half a tonne of drugs, including 306kg of crystal methamphetamine - also known as ''ice'' - and 252kg of heroin, were seized.

"At the end of the day, there's a lot of 'Mr Mediums' and 'Mr Littles' that work with 'Mr Big'," Deputy Commissioner Andrew Colvin told reporters.

"I think we've got a good combination of the people responsible for this importation."

The drugs were found hidden in a shipment of 3,200 terracotta pots at Sydney's Port Botany, and were concealed in hundreds of foil-wrapped, loaf-sized packages.

Those arrested, aged between 29 and 61, were charged on Tuesday with conspiracy to import illicit drugs and holding a commercial quantity of illicit drugs. The charges carry a maximum penalty of life in jail. They have now been remanded into custody until October 17.

"We're talking about a significant quantity of two separate types of substances which generally have different source countries," Colvin said, adding the investigation was continuing and further arrests were possible.

Jason Clare, the home affairs ministers, said the bust was a major breakthrough.

"This is more heroin and more amphetamine than we often seize in an entire year," he said.

Source: Agencies