Police are surprised and concerned about an increased presence of heroin in Newcastle in recent months and set up a special strike force in February to investigate.

Strike Force Toocooya took a major scalp this week, charging a 38-year-old man with more than 300 counts - mostly related to ongoing supply of the drug.

The man, who police allege is "heavily involved" in a criminal syndicate, was refused bail and will face Newcastle local court on May 22. Police are looking at several other suspects and more arrests are expected.

Newcastle police commander Superintendent Brett Greentree said heroin had been a rare find during drug raids in this region in recent years, with marijuana, amphetamines and ice being the most common substances recovered. But he described the emergence of heroin in Newcastle as "very serious".

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"It's enough to certainly raise our concern with the community that there's heroin around," Superintendent Greentree said on Thursday.

"If you think back to the 90s, there was a real rise in Sydney, particularly in the Cabramatta area. So it is just a bit of a surprise that we're starting to see more heroin in this area as opposed to the other drugs, which is a particular concern."

While Hunter New England Health has not noticed a rise in heroin-related presentations recently, police believe the fact they charged one man with 300 counts of supply showed that the drug had been on the streets.

Superintendent Greentree said 300 charges of supply indicated "quite a significant use".

Police arrested the 38-year-old while he was driving a hire car along Llewelyn Street, Merewether, about 1.30pm on Monday.

Officers allegedly found a substance believed to be heroin and cash in the vehicle.

Investigators then searched two properties - one in Berner Street, Merewether, and the other in Park Avenue, Kotara - where they allegedly discovered $11,000 cash and more heroin, as well as drugs believed to be cocaine, MDMA and cannabis. They also seized knuckle dusters, bullet-proof vests, tasers, flick knives, batons, drug paraphernalia and a replica pistol.

Superintendent Greentree would not confirm the specific quantity of heroin police believed had been changing hands through the syndicate, but he said "if you add [the charges] all up together it would certainly be a substantial amount".

"We're talking about 300 individual charges of ongoing supply of a prohibited drug," he said.

"I do anticipate further arrests in the next weeks and months."

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