The victim's friend escaped unhurt after trying to pull his diving companion from the water.

"I understand he came to the surface. There was a cry for help," Mr Francis said.

"But as the other person tried to get him on board, the shark grabbed him and pulled him underneath."

The name of the dead man, who was a professional diver, has not been released.

Recent attacks

Smoky Bay is a known haunt of the great white shark, which has been blamed for a string of recent attacks - although the authorities could not confirm the species of shark behind this latest incident.

The victim was pulled underwater as his friend tried to rescue him

The attack, which took place at around noon on Tuesday, brings to five the number of people killed by sharks off southern Australia in the last four years.

Two surfers died after attacks on two days in September 2000, a windsurfer was taken in May 1999, and another diver killed in June 1998.

Tuesday's attack comes a week after the gruesome discovery of a human skull, arm and pelvis inside a 3 metre (10 foot) tiger shark caught of eastern Australia.

They were found to belong to a missing fisherman who had been washed into the sea while fishing from rocks south of Sydney.