The 34-seat plane, carrying 16 passengers and three crew, was about 19 kilometres from Sydney Airport when its right-hand propeller flew off last Friday, narrowly avoiding hitting the wing and tail.

The two pilots on board flight ZL-768 from Albury were forced to declare a PAN, which is one step down from a full-scale Mayday, before safely landing at the airport.

On Tuesday, a NSW Police helicopter patrolling Sydney's south-west spotted the propeller in bushland at Revesby.

A crime scene has been set up at the location where the propeller was found in the Georges River National Park, just off The River Road.

The site is within a few kilometres of suburban homes, and demonstrates how fortunate it was that no one was seriously injured or killed when it fell from the plane.

"The propeller is believed to have detached from aircraft travelling from regional NSW to Sydney on Friday March 17," a police spokesman confirmed.

"Police are now working with the Australian Transport Safety Bureau to safely recover the item as inquiries into Friday's incident continue."

The propeller will form a key part of the ATSB's investigation into what caused it to break off at the shaft of the Saab 340's right-hand engine.

The plane's first officer saw the propeller break away, and rotate upwards and to the right before moving in a horizontal direction.

Aviation watchers have said it was "incredibly lucky" the propeller did not hit the wing, fuselage or the tail, which could have been catastrophic for the aircraft and those on board. A large object falling from 6000 feet also posed a high risk to people below.

In the wake of the incident, Regional Express has temporarily grounded five aircraft to allow engineers to remove propeller gear boxes and shafts similar to those on the Saab 340 forced to make an emergency landing.