Thieves who stole a $160,000 Audi from a home in Sydney's east were foiled when the car's tracking device was turned on, stalling the engine, police say.

Two adults and three children were asleep in their home in Olphert Street, Vaucluse, when thieves broke into their garage about 1.30am, stealing the luxury grey Audi RS4 station wagon, police said.

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The car was found by police on Phillip Street, Alexandria, a short time later.

It's believed the engine stalled after the owners initiated a tracking device installed in the car.