Two small bottles of acid forced the evacuation of around 5,000 staff and students from the city campus of Sydney's University of Technology amid fears of an explosion.

Police say at about 11am (AEDT) university staff found two bottles of picric acid had been exposed to air and crystallised, making the chemicals unstable.

Authorities blocked off several streets surrounding the university's main tower block in the inner-city suburb of Ultimo while police, firefighters and a hazardous materials team attended the scene.

People were allowed to return to the tower and three other evacuated university buildings about 12:30pm, after the police bomb squad confirmed the acid had been made safe and taken away for a controlled explosion.

Superintendent Tom Cooper from Fire and Rescue NSW says the risk was serious enough to evacuate after the discovery.

"They've opened up a cupboard in the basement of the building that contains some picric acid. We've got two 250 millimetre bottles of picric acid that have started to crystallise," he said.

"The danger with this product is when it crystallises and comes into contact with air, when it dries out it can become explosive if it's moved.

"As a precaution we've called in the bomb squad to help us with this issue, as they're the experts in this field."

Some of the hundreds of people who were forced to flee UTS after the unstable acid was discovered. ( Daniel Golestan / @golestagram )

He could not confirm whether an explosion of such a small quantity of the acid could potentially bring down the tower, but said the fumes were another potential hazard.

"I can't comment on the structural integrity of the building but it could cause an explosion and we won't take any risks," Superintendent Cooper said.

"This product is highly toxic and we don't want to cause any further damage to the environment.

"There are other containers of this product in this particular basement that are safe. If there is an explosion we could have an escape and that is what we are trying to prevent."

Picric acid was widely used in military ordinance in the late 1800s and during World War I.

UTS vice-chancellor Ross Milbourne says the two vials of picric acid were among seven being stored by the Faculty of Science.

"Although an explosion was determined to be unlikely, UTS Security was informed and in turn, contacted emergency services before evacuating buildings 1, 2, 3 and 4 as a precaution," Professor Milbourne said.

"I am pleased to report that the threat was quickly neutralised - in only 90 minutes the buildings were evacuated, emergency services arrived, closed Broadway and neutralised the threat, and the all-clear was given and we returned to business as usual.

"The speed with which events unfolded made on-the-fly communications a challenge so, again, thank you for your cooperation and your patience."