A bombing, a beheading, and an incredible escape from drowning using a pocket knife.

It sounds like the plot to a Hollywood film, but this is a piece of history about a World War II bombing off the East Arnhem Land coast that has been discovered accidentally after 74 years.

Reverend Len Kentish was captured as a prisoner of war. ( ABC News: Supplied )

One morning in 1943, coastwatcher and missionary Reverend Len Kentish and five Yolngu men from Arnhem Land communities jumped on board the HMAS Patricia Cam to go to Yirrkala.

The ship was then bombed and machine gunned by a Japanese sea plane.

"It blew the bottom out of the ship and she started to go down immediately," historian Mike Owen said.

Mandaka Marika lives in Yirrkala, and his uncle Milirrma Marika died in the attack along with Djimanbuy, Djinipula Yunupingu and six other seamen.

"It's a very sad feeling just like losing someone, a loved one ... In our heart we remember our brave uncle," Mr Marika said.

Reverend Kentish was taken as a prisoner of war, the only Australian to be captured from home waters.

"The pilot got out with a pistol and beckoned to one of the men, and it happened to be the Reverend Kentish, and he swam over and got on board and was given a drink and they took off," Mr Owen said.

"He was held captive for a couple of months ... he was taken out and beheaded by his captors."

Narritjin Maymuru and Paddy Babawun survived the bombing after an incredible fight.

Paddy Babawun was one of five indigenous men on the ship. ( ABC News: Supplied )

Narritjin Maymuru was one of the survivors of the attack. ( ABC News: Supplied )

They were underwater from the force of the bomb and drowning under a tarp, but they managed to free themselves by cutting through it with a pocket knife and their teeth.

"When they shot the boat, [Narritjin Maymuru] was underneath the water with a tarp ... he had a pocket knife, he cut it and came up through that one," Mr Maymuru's nephew Danadana Gundara said.

But this story was lost in history for 74 years.

Mr Owen discovered it while looking for African coins in East Arnhem Land.

"On our last day we found a large piece of timber from a ship, and while I was investigating the find I realised it was in the right place for a Patricia Cam ... So I started chasing the story down," he said.

The Patricia Cam memorial in Yirrkala commemorating those who died in the 1943 attack. ( ABC News: Mitchell Woolnough )

A ceremony to commemorate those who died was held in Yirrkala this year for the first time, and a plaque in the community is the only memento for those who died in the attack.

"Every year we should remember these brave men working for the Australian Army that were killed there," Mr Marika said.

The Yolngu men's descendants are now calling for them to be commemorated at the Australian War Memorial.

"They offered their life, they sacrificed their lives for family and the land. That's an excellent job," Mr Gundara said.

"We are Australians and we have to do the same things for all, for black and white we're all working together."