Police in Australia's Victoria state say they have seized nearly two tonnes of vanilla powder laced with pseudoephedrine, which has a street value estimated at $290m.

Eight Canadians and two Australians have been arrested in an 18-month investigation, officials said on Monday.

Victoria Police Assistant Commissioner Stephen Fontana said the substance seized is used to produce methamphetamine or "ice".

The final three Canadians were arrested on Sunday, bringing Operation Diamondback to a close, he said.

"We went into resolution phase yesterday with the arrest of three other Canadian nationals and seized over 650kg of vanilla ice laced with pseudoephedrine," he said.

The officer said Australia was targeted by international crime syndicates for its wealth and large drug market.

"Australia has been targeted by international syndicates, organised crime trying to sell their commodities in terms of drugs. Some of this material, we believe, was going to be used in the manufacture of methamphetamine in Australia," he said.

The operation has potentially prevented up to 300kg of ice from being sold.

Source: Agencies