Two men have been arrested after heavily armed police swarmed the University of New South Wales in Sydney's eastern suburbs.

Witnesses say police pursued a car into the university's Kensington campus about 7:30am (AEDT).

They say officers in an unmarked four-wheel drive rammed the Audi, sending it crashing into a concrete wall.

Dozens of plain-clothed officers were seen running off, before arresting two men in fluorescent workman's vests.

They were later charged with armed robbery offences.

A student who lives on campus, Hamish, witnessed one of the arrests.

He says he was woken by the sound of a car crashing into one of the walls of Baxter College.

"I thought a crane or a building had collapsed because I heard a lot of people yelling," he said.

"I looked out of my window and saw a lot of people running in one direction.

"I saw police heavily armed and decked out in gear and chasing someone. There were a lot of people still yelling and running about.

"A few minutes later, a couple of un-uniformed police officers arrived back and they arrested a person."

Hamish says police patted the man down and placed a number of his belongings into a bag.

"He appeared to be wearing a construction type-uniform," he said. "Baggy pants, a hooded jumper and a bright-coloured construction vest."

Around a dozen police officers armed with machine guns and wearing balaclavas were called in to assist the operation, as police helicopters hovered overhead.

Police say another two males in the car managed to escape after it crashed into the wall.

The investigation is being led by the Robbery and Serious Crimes Squad.

It is the second major police operation on the campus, with a 26-year-old man arrested 10 days ago in connection with an alleged acid attack on a student.