For 11 months the Australian Federal Police had their eye on a group of alleged big-time drug smugglers.

Along with investigators from the Australian Customs and Border Protection Service, their every move was monitored until last night when it was decided the time was right to pounce.

Eight search warrants were executed around Sydney and seven men - four Hong Kong nationals and three men from Sydney's western suburbs - were arrested last night for smuggling a record half-tonne haul of heroin and ice into Australia. The 558-kilogram haul has an estimated street value of $500 million.

The drugs - among the largest amount ever seized by the police and border security agents - were stashed in terracotta pots and arrived in Sydney nearly two weeks ago, addressed to a warehouse in Sydney, police said.