Navy and police vessels battled heavy seas to save the 60-year-old man and a 48-year-old woman from the 19-metre vessel at about 7.25am on Tuesday.

Mechanical failures - including a broken rudder - led to the yacht becoming stranded about 185km east of Nowra, on the NSW south coast, before it drifted further to sit around 300km offshore.

The Australian Maritime Safety Authority received a distress beacon alert about midday on Monday, but heavy seas and strong winds plagued rescue efforts.

The 60-year-old - who owns the boat - is believed to have been living on the yacht since the start of the year.

He and his companion set sail from Jervis Bay recently.

Dramatic footage of the rescue showed a small police recovery vessel next to the yacht as the two boats rose and fell in heaving seas.

Got one, one aboard," an observer can be heard shouting in the video.

The duo, who are due to return to Sydney at 6.30 pm on Tuesday, were uninjured but exhausted after their near-24-hour ordeal, quickly falling asleep after climbing aboard their rescue vessel.

NSW Police Chief Inspector Anthony Brazzill labelled the pair "extremely lucky", given winds of between 50 and 70km/h and seas of up to 6m had made executing the rescue effort challenging.

"Their boat wasn't sinking, but they were definitely taking on water. They've got mechanical issues in terrible conditions … it could have been life-threatening if we weren't able to get to them in time," he said.

"They tell us they did check the weather conditions (before leaving shore), but we've had gale-force warnings, so whether it was the right move or not, not for me (to say)."

Their yacht, the Spirit of Mateship, had to be abandoned.

Navy vessel HMAS Canberra assisted in the rescue effort alongside the police vessel Nemesis.

The choppy conditions initially prevented authorities from winching the duo out of their boat and airlifting them for treatment.

They will be given a medical assessment when they arrive in Sydney.