The Navy has been rocked by allegations of an organised drug ring, with claims that kilos of cocaine and heroin have been brought into the country on naval ships.

An anonymous source inside the Navy has told the ABC that sailors have been stashing the drugs onboard Navy vessels to get them into Australia.

The Federal Government and the Defence Force has confirmed Navy personnel are being investigated over the alleged use and supply of illegal drugs at the Garden Island Naval Base in Sydney.

Steroids and other unidentified substances were seized during a recent raid at the base.

The source alleges it has been going on for years.

"[For] 99.9 per cent of the time, Customs don't bring [sniffer] dogs onto the ship ... and dogs can't get down into certain parts of the ships," the source said.

The source says naval ships recently returned from Pacific Rim war games in Hawaii with packages of drugs onboard that were bound for Sydney's red light district.

The sailor says more than 30 people on one ship alone have tested positive to using drugs.

They claim the drug ring infiltrates all ranks of the Navy's sailors.

"It's junior sailors, it's senior sailors. That's why no-one will talk to you," the source said.

Defence says it is too early to confirm the nature of all substances seized in the raids.

Reports today suggest a number of personnel are being investigated over claims they sold illicit substances to backpackers in Sydney.

Home Affairs and Justice Minister Brendan O'Connor says if Defence staff are found to be dealing drugs, they will be getting no special treatment from authorities.

Figures released in June showed Defence had caught almost 600 servicemen and women taking illegal drugs and steroids in the past five years.

Despite the latest revelations the Government says Australians can still have confidence in the Navy.

Authorities say they are taking a strict zero-tolerance approach to drug use.