The incident occurred off the coast of the town of Kommetjie, as an army submarine en route to Cape Town staged a refuelling operation at sea.

The operation involved a helicopter dropping off supplies, but that went awry when strong waves lashed the submarine.

"High waves swept away seven crew members out to sea," said the South African National Defence Force (SANDF).

The rough conditions adversely affected rescue attempts.

"All seven members were recovered but sadly there were three fatalities with one senior officer in critical condition," said the army in a statement.

The South African National Defence Union, a trade union for the military, also confirmed the "navy exercise" incident and the casualties.

The Cape Peninsula is home to South Africa's largest naval base, Simon's Town.

The South African navy is to hold a series of parades and exercises in Cape Town from Saturday to Monday, with the public invited to board ships and a submarine.