Members from the GAP special operation unit and the new Night patrols carried out the joint raid at 00.30am.
The operation was mounted after a known street vendor was spotted leaving the old Zafra Hostel with a plastic bag.
He was intercepted by police and admitted that he had collected it from inside.
However, when police decided to raid the building, they came across an Aladdin's cave of goods.
According to Local Police sources there were over 100 boxes of assorted items most of which was jewelry, belts, sunglasses, bags and clothes etc.
What is more, police sources said the bulk of the material was counterfeit, especially items like handbags, belts, watches and jewelry.
In total, the police confiscated 600 imitation top brand belts, 120 baseball caps and 180 fake sunglasses.
Police sources said that the hostel was being used as a major distribution point for a group of illegal street vendors and the result of the raid was significant.
It was the second strike the police have made against street vendors in the past year.
At the end of last summer, Playa de Palma Local Police confiscated 80'000 imitation watches.
The new Mayor of Palma, Mateu Isern and the Local Police intend to continue with their operations as part of the annual summer police operation to ensure maximum levels of citizen safety.
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