The Spirit of Mateship activated a distress beacon at 12.40pm while located 185 kilometres off the coast of Nowra,south of Sydney,the Australian Maritime Safety Authority (AMSA) said.
The 19-metre yacht is believed to have suffered a mechanical issue and was taking on water.
A rescue mission is under way to save two people stranded on a yacht nearly 200 kilometres off the NSW coast.
Three helicopters made contact with the boat,but were unable to retrieve the two crew members due to fuel considerations.
A statement from AMSA said an RAAF C-130J Hercules aircraft from the Richmond air base remained on the scene until 9pm.
Two ships – HMAS Arunta and HMAS Canberra – were also assisting,the former arriving at 6pm and the later expected on site at 11pm.
NSW Water Police vessel Nemesis was expected to arrive about 2am on Tuesday.
Due to weather conditions,AMSA said it was likely that any rescue attempts would be postponed until first light on Tuesday.
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