A cargo ship that left the Australian port of Wollongong on Monday morning has lost power and is drifting at sea south of Sydney with 21 crew on board.

According to the Port Authority, the ship is now anchored near the coast and two tugboats are on location to try and prevent it from getting closer to nearby cliffs and rocks.

A third tugboat is on its way to tow the stranded cargo ship, said John Finch, Port Authority of New South Wales Incident Controller.

Finch said that it was just a case of failure. "Cars fail, ships fail. That's what happens sometimes at sea."

Finch added that the crew on board the stranded ship "are confident now they've determined exactly what the issue is with the main engine. They do have spare parts on board and they do have qualified marine engineers on board who can effect those repairs".

There was a plan to airlift the ship's crew to safety but that has been abandoned because of bad weather. (AP)