William Lam, 32, got  into difficulty when he entered the water at Wallis Lakes to retrieve his child’s shoe just before 2pm on Wednesday.

Emergency services were alerted when the Berala man failed to surface.

His body was found near Regatta Island just after midday.

A report will be prepared for the Coroner.

Police earlier in the day said they believed Mr Lam, who was not a strong swimmer, had "most likely drowned.

"We can't sugar coat this, the conditions were bad yesterday," Great Lakes Local Area Command Inspector Charne Musgrove said on Thursday.

Police divers were called into the area shortly before 10am Thursday to scour the lake.

"There were a few witnesses who saw Mr Lam in the water but the weather yesterday (Wednesday) was too atrocious to get a boat in," Inspector Musgrove said. 

"The witnesses grabbed the son once they saw the father in the water and called police. The little boy was then taken back to Forster Police Station and is ok." 

Mr Lam, who was in the Great Lakes area with his wife and two children, was last seen by witnesses near a yellow buoy just out from the Tuncurry boat ramp before a strong current pulled him under the water.