It is one of the world’s great maritime mysteries: how could Australia’s most distinguished warship fall prey to a poorly armed adversary with the loss of every one of its 645 crewmen?

The only traces of HMAS Sydney to have been found were a sailor’s body washed up on an island beach and a lifeboat, stumbled upon in the weeks after its battle with the DKM Kormoran, a German merchant raider that also sank in the encounter, on November 19, 1941.

The fog of war lifted yesterday when the largest vessel to be sunk with no survivors during the Second World War was found 66 years after she was last seen crippled and ablaze on the horizon off Western Australia.

The sinking astonished and perplexed the nation. In response to a public campaign to finally discover its fate, the Government agreed to finance an official search.

Two weeks after sailing into the Indian Ocean a survey vessel using sonar found the 6,800 tonne cruiser 12 nautical miles from the wreck of the Kormoran, which itself was located on Saturday about 430 nautical miles (495 miles) north of Perth. “This is a historic and a sad day for Australians,” Kevin Rudd, the Prime Minister, said announcing the discovery yesterday.

The Sydney lies upright, with its 169-metre hull largely intact, 2.5km below the surface. The sites of both ships are to be declared war graves and there are no plans to raise any wreckage.

Relatives welcomed the discovery as a chance to find out how their loved ones died in Australia’s largest naval loss of life. Searchers hope that footage of the wreckage, to be taken by a remotely operated vehicle, will reveal the cause of the disaster.

The Sydney, which served with distinction alongside the British and French in the Mediterranean, had been sailing from Sumatra back to Fremantle when the warship encountered the Kormoran, disguised as a Dutch freighter. While the Sydney’s crew perished, there were 317 German survivors from among the Kormoran’s 397 sailors. Their accounts suggest that the Sydney sailed too close, with Kormoran’s first shots causing catastrophic damage to Sydney’s bridge, radios and gun control.

Nick Walden, whose uncle Albert Hollington was an acting leading seaman on the Sydney, said: “We can’t still work out why nobody got off the Sydney. It’s the mystery still, we need to find that out.” But Wes Olsen, an Australian author of a book about the Sydney, said that no one would ever know why the warship, with far superior six-inch guns, came within 1,500 metres — well within the range — of the raider. “We are always going to be in the dark as to what prompted the captain of the Sydney to go so close to what must have been clear to him a suspicious vessel,” Mr Olsen said.David Mearns, a shipwreck hunter who led the expedition and who was involved in finding the wrecks of the HMS Hood and the DKM Bismarck, said that a 25-metre (80ft) section of the bow had snapped off. “Our feeling is that the loss of the bow, which had been weakened by the torpedo hit on her port side . . . is probably what sent Sydney to the seabed.”

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