A family in Sydney's south-west has been left terrified after a drive-by shooting and firebombing at their home in what police say appears to be a case of mistaken identity.

Emergency crews were called to Sapphire Place at Eagle Vale after neighbours reported a shooting about 4.30am today.

When officers arrived, a black BMW sedan was found well alight outside the family home.

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Acting Commander Michael Moroney said while the home itself appeared to be targeted, the occupants were not the intended targets.

"What I understand at this stage is that those residents were only new to that location," Moroney said.

"So they … were not the intended targets.

A husband, wife, and three children who were inside the home were left terrified, telling 9News the shooting and firebombing was a case of mistaken identity.

The home owner said her family was asleep when multiple shots rang out.

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"We just moved here, haven't been here long," she told 9News.

"Obviously a case of mistaken identity, we are not bad people.

"There was a bullet hole that skimmed across [the kids'] heads and into the roof."

Police believe the hit was planned well in advance, with the same group spotted on security cameras 30 minutes before the ambush, arriving to scope out the street.

While only three men were captured on CCTV before fleeing in a dark coloured ute, police say they are searching for a wider network.

"We are looking closely at who lived there previously as a main line of inquiry for this ongoing investigation," Moroney said.

Authorities are appealing to anyone in the Eagle Vale area with dashcam or CCTV footage to come forward immediately.

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