A teenage girl and her father rescued after a catamaran overturned in rough seas off the NSW city of Newcastle have been released from hospital.

The girl's grandparents and another man were killed when the 11.7metre-long catamaran overturned seven nautical miles off the coast of Stockton Beach yesterday morning.

Jeremy Cooper, 50 and his 16-year-old daughter Emma were found clinging for their lives when rescuers reached the boat.

Survivors Jeremy Cooper, right. and his teenage daughter Emma. (Nine)

Police from Marine Area Command, as well as the Marine Rescue Association and the RAAF attended after an emergency beacon was activated. All five were wearing life jackets, authorities said.

They were winched from the water and taken to John Hunter Hospital to be treated for hypothermia. The pair was released today and returned to their Central Coast home.

The girl's 78-year-old grandmother and grandfather, from Glenhaven in Sydney's north west, did not survive.

The catamaran overturned seven nautical miles off the coast of Stockton Beach yesterday. (Nine)

The two survivors were winched aboard a rescue helicopter and flown to hospital. (Nine)

A 67-year-old friend of the family who was on board at the time also died.

The 11.7-metre catamaran had left Shoal Bay earlier yesterday and was heading south towards Ettalong Beach on the NSW Central Coast.

Westpac Rescue Helicopter pilot Graeme Anderson said the girl and her father were left shaken by the incident.

(Nine)

"The conditions out there were really, really poor. Strong winds, large waves. We were lucky that we got there," he told Nine's Today Show.

"They were shaken and very upset.

"They were suffering hypothermia and a slight knock to the head from bashing up against the vessel, but they're very stable.

Marine safety authorities say the yacht’s emergency beacon guided rescuers to the stricken vessel.

Efforts to recover the upturned boat were called off due to poor weather conditions. (Nine)

It was hoped the boat could be salvaged today but rough sea conditions stopped the recovery effort.

A strong wind warning is in place along the NSW coast, from the Hunter down to Eden, triggering warnings.

“We could be talking about 100kms/h winds out there. We could be talking about seven or eight metre waves. Don’t be on the water tomorrow,” warned Mal Wardrop of NSW Marine Rescue.