A local family honours lost grandfather at memorial service in Melbourne | Photos

A local family has discovered what happened to their grandfather, who disappeared without a trace during WWII, with the discovery of a sunken ship off the Victorian coast.

Earlier this year there were news reports that archaeologists had discovered an Australian freight ship which was sunk by a Japanese submarine during World War II.

The ABC reported the ore freighter SS Iron Crown sank within 60 seconds in June 1942 after it was hit by a torpedo while travelling through the Bass Strait, killing 38 people. The ship had been transporting manganese ore from Whyalla in South Australia to Newcastle.

One of the 38 people on board was Peter Ferguson from Young and his sister Ellen O'Young's grandfather, the man Mr Ferguson had been named after.

"We never knew what happened to him," Mr Ferguson said. "All I remember my father telling me that Grandfather was lost in a shipwreck off the southern NSW coast."

After the discovery of the sunken vessel the CSIRO archeologists were able to find the ships log which documented Mr Ferguson's grandfather, Peter Ferguson.

On September 3 Mr Ferguson and Mrs O'Young travelled to Melbourne to join with other descendants from those on the ship to attend a memorial service to honour the lives lost.

"The discovery of the SS Iron Crown and the memorial service recognising the effort of all the seamen, especially those who lost their lives during WWII was very meaningful for me," Mrs O'Young said.

"The mapping of the ship's exact position gives a physical location of the resting place of our grandfather and closure for our family and descendants."

"It was honourable to be there and have that closure," Mr Ferguson said.

"For the family to be a part of war history is something that will always be cherished."

Peter Ferguson (senior) was found to be eligible for four medals by the Australian Department of Defence and were posthumously awarded the 1939-45 Star, Pacific Star, War Medal 1939-45 and the Australian Service Medal 1939-45.

According to reports done by the ABC the attack had been kept under wraps at the time by the Government to stop people panicking about the tragedy and so the location of the shipwreck remained a mystery.

Of the 43 men on board only five sailors survived.

"To be with all the other descendants was so very humbling," Mr Ferguson said.