A "highly serious incursion" of red fire ants at Port Botany could cost the economy billions if eradication efforts are not successful, the Department of Primary Industries has warned.

The colony, which is thought to have arrived on a cargo ship, originated in Argentina, according to genetic tests. An emergency response team of 25 biosecurity and pest experts and three odour detection dogs have been working around the clock for almost a week.

The ants are "highly aggressive" and "a serious exotic pest that can inflict painful bites on people, pets and livestock", the NSW Minister for Primary Industries, Katrina Hodgkinson, said.

Invasive Species Council chief executive Andrew Cox said the outbreak poses a threat to the community if it is not contained. "It's going to be a disaster for the environment, and it's going to transform our way of life," he said. Unless the ants were eradicated immediately, Mr Cox said they could spread to other parts of the country. "They will take over open areas, grassy areas, and you won't be able to walk around with thongs anymore for large parts of Australia."