Hope has vanished for four men and a woman after the helicopter in which they were passengers disappeared from radar off the NSW coast.

A search later spotted the semi-submerged wreckage, but rescuers were foiled by rough conditions, making it too dangerous for divers to enter the water.

The Bell UH1 dropped off the radar near Anna Bay, north of Newcastle, at about 6.30pm on Friday on a private flight from Coffs Harbour to Bankstown

The aircraft belonged to Brisbane Helicopters owner and pilot David Kerr, who is believed to have been flying the aircraft when it disappeared.

Air traffic control indicated that the aircraft was rapidly losing altitude when contact was lost, and there were no detected emergency beacons signals or Mayday calls

Civil Aviation Safety Authority records show the 1960s US military helicopter – famously known as a “Huey” – was registered for use by the Brisbane company in October last year.

The tail rotor was found about 8.45am on Saturday by water police before a rescue helicopter sighted the main airframe at 9.30am about five miles south of Fingal Bay, the Australian Maritime Safety Authority (AMSA) said.

The observer in the rescue chopper watched the airframe sink “a short time later” before boats could reach the area.

“The location of the airframe is consistent with the drift model of where the aircraft was believed to have entered the water,” the AMSA statement said.

“There have been no sightings of the occupants of the helicopter.”

NSW Police will now lead efforts to recover the sunken wreckage.

“AMSA would like to thank all the agencies involved in this rescue in extremely challenging conditions and extends our deep sympathies to the family and friends of those aboard the helicopter,” it said.

– with AAP