Police have given up hope of finding a missing yachtsman alive after his boat was found drifting off a nudist beach at Port Stephens on Tuesday.

A full-scale search was launched to find the 48-year-old man from Tasmania, who was thought to live on the yacht, when it was found in the shallows at Samurai Beach at Nelson Bay mid afternoon.

Police, lifesavers, the Westpac Life Saver Rescue Helicopter and Marine Rescue NSW combed the waters several nautical miles off the beach, but they found no trace of the man.

Stephen Leahy, the chief executive of the rescue helicopter service, said certain objects found on the boat suggested the man might have fallen overboard.

If this is the case, police believe it is unlikely he was able to survive due to conditions in the water.

On Wednesday evening, police announced the search had officially been suspended.

Efforts will resume at 8am on Thursday with a recovery operation to find the man's body.

Detectives are following up the possibility that the boat, FireFly, was spotted at nearby Lemon Tree Passage on Tuesday morning.

At 3pm, it was reported to police as drifting when a man found it close to the beach, towed it to deeper water and put down the anchor.

Anyone with information is urged to contact police.

- with Megan Levy