FORMER Essendon coach Mark "Bomber" Thompson allegedly had a collection of illicit drugs in a locked room at his Port Melbourne home.

Police also say they found handwritten notes about drug transactions referring to "Bomb" and three other people.

The 54-year-old, who played in three premierships with Essendon and coached Geelong to two flags, faced Melbourne Magistrates Court on Tuesday charged with seven drug-related offences, including trafficking and possession.

Senior Constable Naomi Bourke said quantities of methamphetamine, ecstasy, LSD and MDMA were found in plastic bags during a raid of Thompson's Port Melbourne home by police in January 5.

Some of the drugs were found in a small room protected by a keypad locked entry.

Police allege only Thompson had access to that room.

"It contained Geelong Cats memorabilia and the accused's coin collection," Const Bourke said.

"We believe that belongs to him."

Mark Thompson leaving the Magistrates Court on Tuesday.

Thompson was arrested and charged on Tuesday after he attended a police station.

Const Bourke said Thompson had been interviewed by police in January about the bags of drugs seized from his home.

"Subsequent DNA tests indicated the accused's DNA on the items located," she told the court.

It's alleged more than 830 grams of MDMA was also found in Thompson's home.

The policewoman said officers found a handwritten lease agreement between Thompson and another resident at his home, Thomas Windsor, who also faces drug trafficking charges.

They also found handwritten notes "depicting large amounts of money", Const Bourke said.

Thompson has been released on bail after offering to pay $20,000 surety and reporting to police three times a week.

Thompson did not speak in court other than to say "yes, sir" when magistrate Leonard Brear asked him if he understood his bail conditions.

Ex-wife Annette and daughter Lauren sat at the back of the public gallery, their presence a factor in Thompson being granted bail.

Thompson sat with his head in his hands for close to an hour as he heard evidence.

Const Bourke stated he was a "flight risk" with access to significant funds, ownership of a yacht and that he departed the country earlier than anticipated during his investigation period.

Thompson will not be able to leave Victoria for football-related matters unless notifying police within 24 hours of his departure.

He is due back in court on May 25.

Thompson last coached in 2014, when he steered Essendon to the finals as senior coach James Hird sat out the season for his role in the Bombers' supplements saga.

Thompson had been poached by the Bombers at the end of 2010 to be a senior assistant to Hird, having coached 150 games and two premierships with Geelong.

He played in three premierships with the Bombers in an illustrious career at the club, including being skipper of their 1993 triumph.

But his time in the game ended in acrimony, as Thompson was penalised by the League for his role in Essendon's doping saga.

Additional reporting from Callum Twomey