Eighteen people have been arrested during a major police operation targeting rogue childcare providers accused of stealing millions of taxpayer dollars.

Fraud detectives were assisted by tactical officers when they stormed 22 properties and childcare centres during morning raids around Sydney and Wollongong.

The operation targeted properties at Greenacre, Chester Hill, Bass Hill and Georges Hall and a home near Wollongong.

Fifteen women and three men are accused of making fraudulent claims against the Federal Government's childcare subsidy scheme, which was set up in July last year.

It is alleged that federal subsidies were claimed for children who did not exist.

The means-tested scheme is designed to help reduce the financial burden placed on low and middle income families paying for childcare.

Subsidies are generally paid to childcare providers, who are required to pass them on to parents as a fee reduction.

Families then make a co-contribution to their childcare fees, paying the provider the difference between the fee charged and the subsidy amount.

The syndicate allegedly stole money from the federal child care subsidy scheme. ( Supplied: NSW Police )

The ABC understands the alleged crime syndicate stole millions of dollars that should have been passed onto parents.

Investigators have told the ABC that the level of sophistication is likened to that of "the highest levels of organised crime".

The major investigation began in July last year, involving the Financial Crimes Squad and Organised Crime Squad, along with the Federal Department of Education and Training, the Australian Criminal Intelligence Commission and the NSW Department of Education.

All 18 people are expected to be charged tomorrow.