The man killed in yesterday's tandem sky diving accident near Queenstown has been identified by police as a foreigner.

A search has been under way for a man who plunged into Lake Wakatipu during a tandem jump yesterday.

Police today said the family of the dead man was being contacted.

Police said they would need to use sonar equipment to look in water as deep as 250m for the man, now presumed drowned.

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The tandem master who survived the jump has been discharged from hospital and spoke to police yesterday afternoon.

He spent 20 minutes in the lake before he was rescued.

Police are praising locals, including a private vessel and helicopter, who raced to help rescue the jump master from the lake.

"The timely response in recovering the jump master was critical to ensuring his survival," said Otago Lakes Central area commander Inspector Olaf Jensen.

An official investigation into how the parachutists ended up in the water will start today. Two Transport Accident Investigation Commission officials are due to arrive at the lake this morning.

Police say they will reassess the search for the missing skydiver this morning after more than 20 rescue vessels and aircraft scoured the Queenstown lake yesterday afternoon.

The tandem skydive took a tragic turn after a possible parachute malfunction left two skydivers stranded in the cold and windswept waters of New Zealand's third largest lake.

The skydivers were jumping with Queenstown company NZONE.

An NZONE skydiving plane is seen during a search and rescue operation taking place on Lake Wakatipu after two skydivers from the company crashed into the lake. Photo / James Allen.
An NZONE skydiving plane is seen during a search and rescue operation taking place on Lake Wakatipu after two skydivers from the company crashed into the lake. Photo / James Allen.

Emergency services were told at 1.42pm that two skydivers had landed in the lake near Jack's Pt settlement.

Eleven boats, a number of jetskis and planes, the Coastguard, water taxis, helicopters and other emergency services battled windy conditions in a bid to find the skydiver, but rescue attempts were suspended at 6.30pm.

The NZONE skydiving base is seen after two skydivers from the company crashed into Lake Wakatipu. Photo / James Allen.
The NZONE skydiving base is seen after two skydivers from the company crashed into Lake Wakatipu. Photo / James Allen.

TAIC said it had been told a possible parachute malfunction resulted in a passenger and a "tandem master" landing in Lake Wakatipu during a commercial tandem skydive.

It was unable to confirm further details while the search and rescue operation continued.

TAIC said its inquiry would try to explain the circumstances and causes of the accident, with a view to helping prevent similar accidents in the future.

WorkSafe and the Civil Aviation Authority had also been notified.

Search and rescue operation taking place on Lake Wakatipu after two skydivers from the NZONE company crashed into the lake. Photo / James Allen.
Search and rescue operation taking place on Lake Wakatipu after two skydivers from the NZONE company crashed into the lake. Photo / James Allen.

A CAA spokeswoman said it was yet to decide if it would investigate.

NZONE Skydive said skydiving operations had been suspended while the search was ongoing.

"The highly experienced instructor, who has completed thousands of jumps, was completing a tandem jump with a male customer when they landed in a body of water," it said.

"One male is being treated at the Lakes District Hospital for minor injuries and is in a stable condition, and the search continues for the other person."

The company also made headlines in January last year after two of its instructors were seriously injured during a tandem training flight.

Sasa Jojic and Sasa Ljaskevic, originally from Serbia, were hospitalised after performing a "dangerous" manoeuvre.

The pair hit the ground at Drift Bay, south of Jack's Pt, at high speed and suffered serious injuries from the impact of their landing.

The CAA and WorkSafe also investigated that accident.

It is not known if either of the men were involved in yesterday's accident.

Further updates are expected this morning.