The Portland Bay's engine failed shortly after it left Port Kembla in NSW's Illawarra, on Monday morning, leading to fears it would smash against the cliffs of the Royal National Park as it drifted within a nautical mile of the coast.

Yesterday afternoon, a plan was made to tow the ship into deeper water as the crew were confident they had pinpointed the problem and could fix it.

However, this mission stalled late in the evening when the tow lines broke in extreme weather and ocean conditions, with swells of 11 metres.

The Portland Bay was instead moved north to a more sheltered location.

The NSW Ports Authority says the ship is sitting safely about 1.2 nautical miles off Port Botany, with both anchors deployed.

One tug remains connected to the vessel and another is close by.

The crew has been unable to make the repairs on-board and the ship will be brought into Port Botany when the weather eases.

READ MORE:

With the current forecasts, it is expected the ship will remain off-shore until at least Wednesday.

Another tug with heavy duty emergency equipment is travelling from Newcastle today provide further assistance.

On Monday morning, the plan was to airlift eight non-essential crew from the ship.

Westpac Life Saver Rescue Helicopters found the stricken boat after a being advised by the Australian Maritime Safety Authority.

They carried out some test winches but due to high winds, large seas and the type of ship it was deemed too risky.

"There was an initial plan this morning to evacuate the non-essential staff, but once the vessel deployed its anchors and it was in a stable position, it was no longer drifting towards the rocks, the master asked to keep his crew on-board because at this point in time, they're confident that they can actually make an engine repair once they're out in safe, deep water," NSW Ports Authority incident controller John Finch said on Monday afternoon.