The collision occurred about 8.50am, when a southbound Holden Commodore station wagon towing a box trailer collided with a white van.

Police said it appeared the trailer, rather than the Commodore, collided with the van, although the crash investigation unit was still to determine the cause.

The male and female occupants of the van were trapped for about an hour as Kiama SES crews worked to free them.

"I got there and the elderly lady was trapped right up to her neck," a witness said.

"All you could see was her head.

"It was just so sad. They looked like holidaymakers. It was a terrible way to end a holiday."

The highway was blocked for several hours while the couple was freed from the vehicle and loaded into a waiting ambulance and helicopter.

As the woman was being airlifted to St George Hospital, the helicopter diverted to Wollongong Hospital, where she died.

The man was taken by road to Wollongong Hospital, where he was in a serious condition yesterday afternoon.

Cars and other light vehicles were diverted through Gerringong for most of the day while the highway was closed and trucks were forced to park on the highway and await its reopening mid-afternoon.

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