Emergency services found the body of a newborn boy in Auburn, in western Sydney, after responding to reports about 11.20am on Monday.
The baby was found naked inside a rubbish bag in an apartment block bin on Harrow Road by a local resident.
Sumandra Banthi, 24, lives in the building where the baby was found and said she saw police from her window.
She said residents had been forced to stay inside all day after police established a crime scene outside the building.
"I'm feeling scared," Ms Banthi told AAP as she headed to the police station to make a statement.
"It's the first time I have seen (something) like this."
Auburn Police Area Acting Commander Darren Sly said it was believed the baby had been in the bin for up to 36 hours but it was too early to determine if he had been born alive.
Authorities were desperately trying to find the baby's mother, with action against her not a police priority.
"Our number one concern is for that of the mother and the mother seeking urgent medical attention (and) the care I'm sure that she needs," Acting Commander Sly told reporters on Monday afternoon.
"It's sad and a horrific set of circumstances."
He said it was very traumatic for the woman who had found the baby while disposing of rubbish and for emergency service personnel.
"My officers are professional, they'll do their jobs, but like anybody, they're human," Acting Commander Sly said.
"We're talking (about) a newborn baby here ... you're going to have those feelings and you're going to have those memories."
Ms Banthi said officers spoke to all of the about 20 building residents soon after the discovery, but did not specify exactly what had happened.
She said the residents were mostly strangers to each other.
Police established a crime scene at the apartment building, which is opposite a school on a suburban street near Auburn's town centre.
Officers started door-knocking in the area and gathering CCTV footage as part of their investigation.
Anyone who may have seen anything in the Harrow Road area in the past 36 hours that could help the investigation has been urged to contact police.
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