'It was crazy': Navy helicopter with 10 on board crashes off Jervis Bay

A Navy helicopter has crashed off Jervis Bay, about 150 kilometres south of Sydney, after what a witness described as an explosion near the rotors.

ACT Police and rescue helicopters were helping the Australian Defence Force respond to the incident about 9.10pm on Wednesday.

The ADF said all 10 personnel on board were accounted for and two suffered minor injuries, revising paramedics' earlier assessment of nine injured.

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Michael, who's seen plenty of military operations over 20 years with a home in the area, was fishing with friends on Iluka Beach when the chopper went down.

"This one operation, it was like, it was crazy," he told 9News.

"They had a couple of boats out there and then they had two choppers and one was going low and high and low and then like at one point, one of the helicopters, you could hear the rotors were slowing right down.

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"And then they revved up, and then there's this big explosion on the top of the rotors and then it just went bang, ditched in the water."

The ADF said the crew were involved in routine counter-terrorism training, which has been paused as a precaution.

The fleet of MRH-90 Taipans, the aircraft involved, have been grounded while the crash, near the HMAS Creswell training base, is investigated.

Despite the drama, Michael said the helicopter was only 10 or 20 metres above the water and the crash looked "very controlled".

"And then all of a sudden everything just like, all hell broke loose and they had choppers flying in, they had two or three other choppers flying in," he said.

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"They had boats coming in and they had this really big Navy ship coming in so they were really quick to the scene and everything but yeah, crazy. It was so surreal."

The wreck was quickly towed from Iluka Beach across to Greenpatch, the fisher said.

It's unclear what caused the crash.

Chief of Army Lieutenant General Simon Stuart thanked emergency responders.

"Tonight quick responses from ADF personnel and emergency services and well drilled teams prevented a potential tragedy," he said in a statement.

"We will conduct a thorough investigation into this incident to determine the cause and ensure the platform remains safe to operate." 

An ADF spokesperson said everyone on board had been safely recovered from the water.

"At this time Defence's priority is supporting the ADF members involved in the incident and their families," they said.