The Federal Opposition has labelled the Navy a "basket case" after further details emerged about problems with one of its ships.

A Senate estimates committee has heard that in September last year HMAS Kanimbla's engines stopped working and the ship drifted towards rocks near Sydney Harbour.

A $90 million Tiger helicopter was on board at the time.

Opposition Defence spokesman David Johnston quizzed Defence officials about the incident in a hearing yesterday.

"I put it to them they were 20 metres from North Head, drifting until they could get the motor going, and nobody denied that, that's what I've heard," he said.

He says it is a serious incident and it is lucky no one died.

"There's a lot of problems with Navy, in fact I'd say Navy is currently a basket case," he said.

"It's going to require an awful lot of money and an awful lot of time and some considerable expertise to get our Royal Australian Navy back on track."

Defence Force Chief Air Chief Marshal Angus Houston has defended the Navy's handling of its fleet, which has been plagued by seaworthiness problems.

HMAS Tobruk is being repaired, HMAS Kanimbla is out of action for 18 months, and HMAS Manoora is being decommissioned.

Last week, Defence Minister Stephen Smith lashed out at the Navy, condemning its "make do" culture.

The Defence Force has justified spending up to $28 million to repair HMAS Kanimbla.

Defence officials recently decided to decommission HMAS Manoora because they said the $20 million repair bill was not cost effective.

But they have explained the decision, saying HMAS Manoora would only have been operational for nine months.

Air Chief Marshal Houston defended the Navy's handling of its fleet during his Senate estimates appearance.

"It's just unacceptable to me that we would operate a ship that wasn't seaworthy, now in my view the decision to invoke the operational pause was absolutely essential," he said.

"The consequences of having a major breakdown at a critical time could result in our people being imperilled.

"We always knew that the last couple of years of operating these ships was going to be challenging, after all they are very old, so I totally support the decision that was made for the operational pause and I totally support the decision to decommission Manoora."