Two crew members are dead and a third is in a critical condition after their runabout boat smashed into a stationary ex-navy boat in Waikawa Bay, Picton this afternoon.

Police said when rescuers arrived they found five people in the water in a serious condition.

They were plucked to safety but two died and the critically injured person was flown to Wellington Hospital.

The runabout hit the 91 tonne moored Flightless, a vessel that was formerly the Navy's inshore patrol craft Moa.

The 27m boat ended her naval service in January 2007, and was sold in March that year to Picton builder Steve Woledge, for private use in the Marlborough Sounds.

Mr Woledge tonight confirmed the Flightless had been hit while at anchor, but declined to comment on the collision.

Picton deputy harbourmaster David Baker said it was a "very serious" accident.

"The injured people are being evacuated by helicopter as well as ambulance ... so yeah, a really tragic scene."

He said the Flightless was safely moored and there was no obvious reason for the collision.

Mr Baker said the runabout, which was a commercial vessel with a competent skipper, worked the Marlborough Sounds and was returning to Picton.

He said conditions were good and the vessel was travelling at a speed of 20-25 knots.

The speed limit within 200 metres of another vessel was five knots but the crew had obviously not seen Flightless.

Sunstrike may have been a factor but it was too early to say.

"It just shows it's important to keep a good watch," Mr Baker said.

He was not able to say anything about relationship of the people on board the runabout.

He said an investigation had begun into the collision and a report would be available within the next few months.

"Luckily we don't get many (accidents) in boats (as opposed to cars)," Mr Baker said.

"The weather was fine. For some reason there's been an accident and we don't really know any reason for it at this stage."

The crew on board would be interviewed when they were fit enough.