A Regional Express Saab 340 similar to the one pictured made an emergency landing at Sydney Airport on Friday.

Passengers on a Regional Express aircraft in Australia endured a nightmare flight after one of its propellers sheared off mid-flight, forcing it to make an emergency landing at Sydney Airport.

The Saab 340, carrying 16 passengers and three crew, was about 10 nautical miles away from Sydney when its right-hand propeller flew off, forcing the two pilots to declare a PAN, which is one step down from a full-scale Mayday.

Emergency services readied for the plane's arrival at the airport, but it landed safely shortly after midday on Friday.

The plane's distraught passengers were taken to the terminal at Sydney Airport after the plane landed and offered counselling. The plane has been towed to Regional Express's hangar near the domestic terminal at Sydney Airport.

Given the proximity of the turboprop aircraft over built-up areas near Sydney when the mid-air incident occurred, aviation sources said it was fortunate that the propeller did not injure people on the ground.

The plane was likely to have been above Camden in south-west Sydney when the propeller sheared off.

Early inspections of the plane suggest that the propeller has broken away from the shaft in the engine.

Residents in south western parts of Sydney have been told to inform police if they discover the propeller, which will form a key part of an investigation into the incident.

A spokeswoman for Regional Express said the airline was still investigating what caused the propeller to dislodge on Flight ZL768.

"We are still investigating what happened and what was the cause," she said.

A spokesman for the Civil Aviation Safety Authority confirmed that the plane's right-hand propeller "came dislodged" about 10 nautical miles from Sydney Airport, and the plane declared a PAN emergency before it proceeded on to land safely.

Twin-engine planes can land safely on one propeller.

The Australian Transport Safety Authority is investigating the incident.