Prime Minister Kevin Rudd confirmed the wreckage of the Sydney was found on Sunday about 250km south-west of Carnarvon on WA's west coast.

"This is over 65 years ago, but pain and family loss even at 65 years removed, is still pain, and very deep pain," he told reporters.

"On behalf of the government, I would say to all those members of the families of the brave members of the crew of the HMAS Sydney that the government extends to them our condolences for the loss of these brave young men."

Chief of navy Rear-Admiral Russ Shalders said the first part of the Sydney mystery - where she lay - had now been solved.

"The next part of the mystery is what happened and that will take some time," he said.

"It will be helped by the ROV activity which, we hope, will happen next week.

"It will take some time to try and ascertain what happened that day 66 years ago."

Sydney's hull, apparently largely intact in some 2,470 metres of water, was found 12 nautical miles from the scattered wreckage of the Kormoran - located last week - and some eight nautical miles from the reported scene of their actual battle.

Both wrecks were found following scans by the survey vessel SV Geosounder using low-resolution search sonar. Scans using higher-resolution sonar were used to confirm the identity of the ships.

Finding Sydney Foundation chairman Ted Graham said the plan was for the SV Geosounder to return to Geraldton on Thursday or Friday to collect a deep water ROV equipped with high resolution cameras.

It will head back to sea on Tuesday or Wednesday next week.

"We will go out and will go to both the sites of the Kormoran and Sydney and the battle site," he told reporters in Canberra.

"We are going to be working in very deep water. Some times things don't quite go to plan so it might take us a while to get some proper photography."

Mr Graham said there were no plans to raise the Sydney because of the depth of the water and because both vessels were considered war graves.

The loss of Sydney with all 645 on board remains Australia's worst-ever naval disaster.

But there were 317 survivors from the 397 men aboard Kormoran who were picked up days after the battle.

They gave the only eyewitness evidence of what occurred but their accounts, including the reported location of the battle, were regarded with some scepticism.

The Kormoran's wreckage was where German survivors said it was, Admiral Shalders confirmed.

"The disposition of the wrecks is as it was recorded by the survivors of the Korman at the time, surprisingly," he said.

Mr Rudd said Environment Minister Peter Garrett was in the process of issuing an interim protection declaration in relation to both vessels.

"I'm advised it provides immediate and early protection of the sites against any unauthorised intrusion," he said.

Mr Rudd said the government and defence, during the next week, would examine how best to commemorate the Sydney crew.

"We will make a subsequent announcement on that because it is very important that we also deal with the surviving family members," he said.

Mr Rudd said the Australian embassy in Berlin had informed the German government of the discovery of the Kormoran while the German ambassador in Australia had also been informed.
Source news.ninemsn.com.au/article.aspx