A man who was allegedly caught carrying a sub-machine gun in a bag at a shopping centre in Sydney's inner-west has been refused bail.

It is understood Marc Avidov, 41, was trying to sell the weapon when he arrived at the Marrickville Metro shopping centre in a taxi about 12:30pm yesterday.

Police, detectives from the Firearms Squad and officers from the Tactical Operations Unit were waiting to arrest Avidov in the car park of the shopping centre, on Murray Street at Marrickville.

Police said they discovered a Thompson branded fully-automatic submachine gun, a clip and almost 200 rounds of ammunition in Avidov's bag.

Sergeant Dave Rose said "some of the gangsters in the United States used to carry them".

"It was one that featured fairly heavily in any of those World War II pictures.

"So a rather frightening piece of firearm capability there."

Avidov was arrested without incident and charged with possessing an unregistered firearm, acquiring a firearm without a licence and possessing ammunition.

Police have not revealed how they knew the man was carrying the weapon or where to find him.

He did not apply for bail when he appeared briefly in Newtown Local Court on Thursday, with his lawyer telling the court that Avidov was not required to appear in the stand.

However, Magistrate Robert Williams disagreed and said the seriousness of Avidov's charges meant that he should be brought into the dock.

Avidov was previously convicted in absentia for two prior matters and today his lawyer told the court he wished to have those convictions annulled.

Those convictions relate to photography equipment, blank drivers' licences, and licences and passports stolen from a number of people that police allege Avidov planned to use to commit fraud.

He is also alleged to have stolen a laptop and sold it to a pawn broker in Chippendale.

Magistrate Williams formally refused Avidov bail.

He will remain in custody and will face court again next week.