There was an explosion and fire on board an Army helicopter seconds before it ditched into the ocean off Jervis Bay, an eyewitness says.
The MRH-90 was conducting a "routine" counter-terrorism training exercise around 9pm on Wednesday with 10 Defence personnel on board when the emergency occurred.
Michael Underbock was on Greenpatch Beach fishing with mates when he witnessed the helicopter hovering very close to the water.
"This chopper was just hovering above the water, about 20 or 30 metres above the water, and the engine started dying off a little bit. Then it picked back up again, rose a bit," he told Sunrise.
"There were all sorts of sparks on top of the chopper and then a big flash, a big bang and then a bit of a fire on top of the chopper then it ditched down.
"It was kind of all happening very, very low to the water and it was all over within a moment."
Mr Underbock and his mates ran along the beach towards the stricken helicopter to offer their help.
"They basically said 'nothing to see here' and asked us to step away," he said.
In 2021, the Navy's 808 Squadron MRH-90 Taipan helicopters were temporarily grounded due to IT maintenance issues.
Chief of Army Lieutenant General Simon Stuart said quick responses from ADF personnel, emergency services and well-drilled teams on Wednesday night prevented a potential tragedy.
"We will conduct a thorough investigation into this incident to determine the cause and ensure the platform remains safe to operate," he said.
Defence has grounded the MRH-90 Taipan fleet and suspended the training activity while the cause of the incident is investigated.
The incident site is being contained by Australian Federal Police and port services personnel.
Sign up for our newsletter to stay up to date.