Authorities are searching for the wreckage of a Large Air Tanker that crashed while fighting a bushfire in southern NSW.

In a statement, the NSW Rural Fire Service (RFS) said "contact had been lost with a Large Air Tanker which was working in the Snowy Monaro area".

"Local ground crews indicate the aircraft may have crashed," the statement said.

"A number of helicopters are in the area carrying out a search.

"No further information is available at this time."

Flight tracking website Flightradar24 showed the flight path for a Lockheed C-130 Hercules, an air tanker used in waterbombing operations, suddenly stopping south of Canberra.

According to its flight data, the aircraft departed RAAF Base Richmond, in western Sydney, around 12:15pm.

However, just after 2pm the aircraft stopped in an area called Peak View, just north-east of Cooma.

Another live flight data website, ADSB Exchange, also showed a military aircraft owned by the RAAF circling the area near the town of Bredbo.

GIF: The C-130 Hercules, seen on Flightradar24, suddenly stopped moving south of Canberra.

The crash occurred amidst an emergency blaze burning towards Adaminaby, in the Snowy Monaro region.

A massive grass fire also forced Canberra Airport to cancel all incoming and outgoing flights.

Commercial flights around the capital have been stalled and diverted while the fires continued to rage below.

In 2017, the NSW Government invested $38 million over four years for three Large Air Tankers to be used in firefighting efforts.

The aircraft are capable of dumping more than 15,000 litres of water or fire retardant at a time.