Sue Schubert’s two children and her nephew, all 14-years-old, were swimming under the bridge when she heard people cry “get out of the water shark, get out of the water.”

Standing on the shore in Forster, looking after six other children, Mrs Schubert said she watched helplessly as the shark swam towards her children.

“I was just hysterical,” she said.

One boat owner watching the situation unfold positioned his boat between the shark and children, while another man lifted one of the boys into his boat as the others swam to a nearby island.

Mrs Schubert said as far as she knows the 2m thresher shark was last in the lake late on Sunday afternoon.

She and her husband David, said they were sincerely thankful for the action of boat owners.

According to the Australian Museum the thresher shark can be found in temperate and tropical waters between southern Queensland and Tasmania.

It has distinct pointed, pectoral fins and can grow to a maximum size of 5.5m.