A freshwater crocodile has been recovered after a police search warrant was executed at a house in Hamilton Street, Dapto, on Tuesday.

Officers from Lake Illawarra raided the property about midday following reports the 1.2-metre reptile was being kept in a shed at the rear of the house.

Police said inquiries were continuing into the crocodile's owner, who could face charges relating to the possession of an unauthorised animal.

It is the second time in less than six months Lake Illawarra police have uncovered unusual animals being kept in the Dapto area.

In December, an alligator, two pythons and a number of lizards were discovered at a property in Bingara Avenue.

Lake Illawarra Inspector Gordon Dunlop said police took matters involving prohibited animals seriously.

"It's an Australian native animal and people that have these animals need training in their wellbeing and care," he said.

An Office of Environment and Heritage spokeswoman said the crocodile would be taken to Shoalhaven Zoo in Nowra, where it would remain for the short term.

"Freshwater crocodiles usually live in North Queensland and are not adapted to deal with the cold in the Illawarra without specialist equipment," the spokeswoman said.

"They also grow up to three metres long and are potentially very dangerous."