Australia’s Defence Minister Richard Marles said the MRH-90 Taipan went down late Friday night in sub-tropical waters near Hamilton Island, Queensland.
It had been taking part in the vast Talisman Sabre exercise, which features 30,000 military personnel from Australia, the United States and several other nations.
“As we speak to you now, the four aircrew are yet to be found” Marles said after a nearly overnight search, which is set to continue Saturday.
AFP understands that all four of the crew aboard the helicopter are Australian.
“The families of the four aircrew have been notified of this incident and our hopes and thoughts are very much with the aircrew and their families,” Marles added.
“We desperately hope for better news during the course of this day.”
Officials have not yet said what caused the incident, which came as the Talisman Sabre excercise was entering its second week.
The drills are designed to test large-scale logistics, land combat, amphibious landings and air operations, and to signal the strength of Western military alliances.
Japan, France, Germany, and South Korea are also taking part.
US Defense Secretary Lloyd Austin is in Australia with US Secretary of State Antony Blinken for meetings which coincide with the drills.
Both men offered their support, as US personnel aided the rescue effort.
“It’s always tough when you have accidents,” Austin said. “But the reason you train to such a high standard is ultimately so you can protect lives.”
It is not yet clear whether the military drills, which are due to end on August 4 will resume.
Australia is currently embarking on a major overhaul of its armed forces, pivoting towards long-range strike capabilities in an effort to keep would-be foes such as China at arm’s length.
Even before the incident, Canberra had announced it will replace its fleet of ageing Taipan helicopters with US-made Black Hawks.
Australian officials have complained about having to repeatedly ground the European-made Taipans, citing difficulties with maintenance and in getting spare parts.
“We just haven’t got the flying hours out of the Taipan that we need. We are confident we can get that from the Black Hawks,” Marles said in January this year.
In March, an MRH-90 Taipan flying south of Sydney suffered engine failure during a nighttime training exercise, forcing the crew to ditch into the ocean.
They survived with only minor injuries, but the entire Taipan fleet was grounded for one month.