Carmel Peterlin and her husband were sitting in their parked car at the Windang Foreshore Park yesterday morning watching the world go by on Lake Illawarra when they saw snorkeller Steven Fogarty waving his arms and splashing about in the water.
"I watched him put on his snorkelling gear and go in," said Mrs Peterlin.
"He was just on the other side of the bridge close to the pylon and then the next thing there was this frantic splashing in the water.
"At one stage he went under the water and came up splashing again and waving his arms.
"He was trying to signal a boat, but they couldn't see him."
Fishermen Glenn Schiller and Cec Campbell were fishing closer to the bridge when they heard Mr Fogarty screaming for help.
"We just heard him screaming and saw a bit of white water as he was thrashing with his feet," Mr Campbell said.
Mr Fogarty escaped the shark attack with minor injuries, but the incident left a chilly feeling among the holidaymakers from Windang Beach Tourist Park and residents who gathered in the foreshore park shortly after.
One witness to the attack said that judging by the size of the bite, the shark would have been about 1.5m long.
Other residents believed it wasn't a shark at all, saying a seal had made the lake his home over the past week.
Many expressed relief they weren't swimming in the lake at the time.
"I have lived here for 75 years and I have seen sharks come into the lake, but never heard of anyone being attacked by a shark in the lake," Mrs Peterlin said.
"What is scary is that people go prawning in there at night and go wading around in the water.
"I am worried for the kids that just come in and go swimming."