Police have raided an alleged organised crime bunker in Sydney's south-west, uncovering military grade grenades and a stash of guns in a townhouse next door to a daycare centre.

More than 1000 rounds of ammunition and $3 million in drugs was also seized from the suburban property.

Police have raided an alleged organised crime bunker in Sydney's south-west, uncovering military grade grenades and a stash of guns in a townhouse next door to a daycare centre.