Witness reportedly heard gunshots at Ulladulla during the first early morning raid, but they were understood to be tactical not live rounds, the South Coast Register reports.

About 100 police searched nine properties in simultaneous raids at Nowra, Ulladulla, Batemans Bay and Moruya and three in western Sydney as part of a lengthy drug-supply investigation beginning in December last year.

Charges are pending and further arrests are anticipated over coming days and weeks, NSW Police say.

Assistant Commissioner Gary Worboys said the illicit drugs seized were worth close to $500,000 and he expected the number to increase over the next few days.

He said the raids had been planned for months and sent a clear message to Sydney drug suppliers selling drugs such as methamphetamine in rural areas.

"We would hope that this will make a huge impact here in Batemans Bay and send a very clear message to people that drugs won't be tolerated here," he said.

"Police acted on information from a number of community sources and have worked that information up to what has been a substantial effort ... and the results are outstanding."

The arrests began at about 7.20am on Tuesday when police intercepted what was believed to be a drug transaction in the Kendall Cottage Rotary Park car park in Ulladulla.

Arrested were two men who police allege were in possession of 58 grams of cocaine and 175 grams of methyl-amphetamine.

Police began the nine South Coast raids shortly after 9am, five within the Shoalhaven Local Area Command at Ulladulla, Burrill Lake and Worrigee, and four in the Far South Coast Local Area Command at Batemans Bay, Moruya, Surfside and Catalina.

A woodfire pizza business in Ulladulla was among the premises searched.

In Sydney, police raided three premises at Prospect, Elizabeth Hills and Hoxton Park.

- with the South Coast Register