Emergency services contacted two sailors stranded at sea but were unable to rescue them due to the extreme weather conditions.
The sailors spent the night on their 19-metre racing yacht, the Spirit of Mateship, which began taking on water on Monday afternoon after a mechanical problem.
The Australian Maritime Safety Authority received a distress call from the yacht at 12.40pm, while New South Wales Police confirmed a distress signal was received approximately 150km off the coast of Nowra.
The rescue operation was hampered by five-metre high waves and wind speeds of 70-90 km/h.
A rescue helicopter attempted to reach the yacht on Monday evening but was unable to safely take out the passengers.
On Tuesday morning a NSW police boat contacted the occupants but their rescue was prevented by bad weather.
The rescue operation also involved two Royal Australian Navy ships and an RAAF C-130J Hercules aircraft.
Since 2013, the Spirit of Mateship yacht has competed in a number of Sydney to Hobart races.
The Spirit of Mateship yacht has competed in a number of Sydney to Hobart races since 2013
Both HMAS Arunta and HMAS Canberra are en route to rescue the sailors (pictured HMAS Arunta during a training exercise)