The bodies of two children have been found following a major search of a bay in southwest Sydney, Australia, hours after a woman was pulled from the waterway.

The trio were seen in distress in Floyd Bay, Lansvale, at about 10.15am on Saturday, NSW police said in a statement.

The woman was located shortly after emergency services arrived but could not be revived.

Authorities initially could not locate the children and undertook an extensive search involving police, the Marine Area Command and the State Emergency Service.

Rescuers were seen combing the waterway on jetskis and in boats.