A crane operating on a barge near Sydney's Luna Park has collapsed and fallen into Sydney Harbour.  Witnesses say it came down with a loud noise.

Witness Luke Bayly told the ABC he was on the other side of the Harbour at about 1:00 PM when it happened.  "I heard a huge bang. I looked up and I saw the crane splash into the water," he said.  "It was a huge bang, it startled me, I thought a bomb had gone off."

Charter boat owner Luke Feledy was also stunned by the noise:  "I looked up and there was this huge wave of sea spray caused by the crane crashing into the water," he told News Corp.  "The bang was like this massive crack sound and I am pretty sure something snapped or broke for sure."

Margaret White from New York was having lunch in a restaurant with a clear view:  All of a sudden we were looking out, and I said 'oh my God' and the crane just came crashing down," she said.  "Everyone in the restaurant jumped when it crashed."

A cable from the crane, which was working at the construction site at the new Milsons Point Ferry Wharf, appears to have snapped off and flown through the air.  It came to rest on Luna Park's iconic smiling entry face.

It appears no one was hurt in the incident.