Long-term closure orders have been imposed on Sydney strip clubs Dreamgirls and Bada Bing after undercover police officers were allegedly sold cocaine by venue staff.

Police raided the Kings Cross clubs in December 2015 after receiving reports staff from the clubs had been supplying cocaine to clients.

During a search of Dreamgirls, police found 17 plastic bags containing suspected drugs.

Several people were arrested and the clubs were temporarily shut down.

Shortly after, police and the Office of Liquor, Gaming and Racing applied to the New South Wales Independent Liquor and Gaming Authority seeking to impose long-term closures on the clubs.

The authority has since granted the applications.

It said it was satisfied the long-term closure of the premises was "necessary to prevent or reduce the risk of a serious threat to the public interest arising from the use, possession and supply of prohibited drugs on the premises".

In coming to its decision, the authority considered evidence from undercover police officers, who were able to purchase cocaine from staff at both venues.

Undercover officers also reported seeing strippers openly snorting cocaine off their fingers in a toilet at Dreamgirls.

An officer also overheard a performer tell a patron they could snort coke from her breasts.

Dreamgirls was also found to be operating an unlicensed bar in an "upstairs" area of the club, where alcohol was sold illegally and patrons were permitted to smoke and consume drugs.

On one occasion, an undercover officer, who visited this section of the club, reported seeing a patron "making a line of white powder on the table and snorting a line of what appeared to be cocaine through his nostrils".

The officer said he also saw a woman dancing naked "who was clearly drug-affected".

In requesting a long-term closure application against Bada Bing, police said officers were able to purchase cocaine at the venue on multiple occasions in September, October and December last year.

The authority said on one occasion a stripper also provided her telephone number to an undercover officer to allow the purchase of more cocaine.

Police submitted to the authority that illegal activity at Bada Bing was well organised and "all levels of management [were] complicit in this illegal activity".

Clubs need to clean up before reopening: liquor authority

The Independent Liquor and Gaming Authority ordered that both venues be closed for six months.

The Acting Director of the Office of Liquor, Gaming and Racing, Anthony Keon, said the clubs needed to make changes to prevent illegal activity.

"These clubs will be closed for a period of up to six months or until such time as there are new licensees and approved managers appointed, which have gone through an appropriate vetting process and are approved by the Independent Liquor and Gaming Authority," Mr Keon said.

"Both venues will also need to implement new drug policies as well as carry out building works, which will prevent access to these illegal bars and these illegal areas where some of this criminal conduct was occurring."