The III Marine Expeditionary Force, whose personnel were aboard the MV-22 when it crashed, said the next-of-kin of the three missing Marines had been notified of the change after "continuous, sustained search efforts" were unsuccessful.

The MV-22 Osprey, carrying 26 personnel, was involved in what was described as a "mishap" about 4pm on Saturday during a military exercise with Australian forces at Shoalwater Bay.

The Osprey had launched from the USS Bonhomme Richard amphibious assault ship and was conducting regularly scheduled operations when the aircraft "entered the water".

The US Marines Corps said 23 personnel aboard were rescued. However, small boats and aircraft from the Bonhomme Richard were immediately deployed on a search and rescue operation for the remaining three personnel.

A Queensland Ambulance Service spokesperson said paramedics took an injured US marine from Rockhampton Airport to Rockhampton Base Hospital about 10pm on Saturday, with the patient having suffered a fractured leg.

However, a statement released from the Marine Corps Base Camp in Okinawa, Japan confirmed the tragic news that search and rescue operations had been suspended.

"The U.S. Navy and Marine Corps suspended search and rescue operations for three Marines involved in the Aug 5 MV-22 Osprey mishap off the east coast of Australia.

"Operations have now shifted to recovery efforts. The next-of-kin for the three missing Marines have been notified.

"As the sea state permits, recovery efforts will be conducted to further search, assess and survey the area, in coordination and with assistance from the Australian Defence Force.

"Recovery and salvage operations can take several months to complete, but can be extended based on several environmental factors.

"The circumstances of the mishap are currently under investigation."

There had been reports circulating that the missing aircraft was trying to land on the American aircraft carrier USS Ronald Reagan, which docked at the Port of Brisbane two weeks ago, when the "mishap" happened, however this has been denied by the ship.

USMC Commandant Robert B Neller asked for the public to keep the families of those involved in their prayers.

"Please keep the families of those involved in the Osprey mishap near Australia in your thoughts and prayers," he tweeted.

US President Donald Trump, who has just begun a 17-day "working vacation", at his New Jersey golf club, had been briefed on the incident by his new chief of staff John Kelly, a White House official told reporters.

Minister for Defence Marise Payne confirmed in a statement late on Saturday night that no Australian Defence Force personnel were on board the aircraft.

The search and rescue operation is being conducted by the 31st Marine Expeditionary Unit and Bonhomme Richard Expeditionary Strike Group, which are on deployment in the Indo-Asia Pacific region.

"The United States are leading the search and recovery effort," Senator Payne said.

She had also briefed Prime Minister Malcolm Turnbull and spoken with US Defense Secretary James Mattis to offer Australia's support.

"Our thoughts are with the crew and families affected," she said.

Queensland Premier Annastacia Palaszczuk offered her government's support to the search and rescue efforts.

"On behalf of all Queenslanders, our prayers are with those US military personnel involved in the incident," she said in a statement.

The incident is the 10th known crash involving an Osprey, a tilt rotor aircraft that takes off and lands like a helicopter but flies like an aeroplane, since 1991, and the sixth since it officially came into service in 2007.

It is also potentially the worst military accident in Australia since the 1996 Black Hawk tragedy that killed 18 servicemen near Townsville.

With Evan Schwarten - AAP