UPDATED 4.22PM: Police say it's fortunate a light plane which crashed off Raglan Beach this afternoon managed to miss hundreds of holiday makers.

Three people are in Waikato Hospital after the Piper Cherokee crashed into water about 100 metres off the beach just before 2.

A female on board is in a critical condition and two males are also injured after the plane went down and submerged.

Police say it appears the engines cut out just after take-off and the pilot was attempting to make it back to the airstrip.

They say the beach was full of holiday makers so it's fortunate the plane avoided the busy area.

Witness Lane Hannah says he watched the plane started heading back towards the airstrip.

The holiday maker from Auckland says it looked like it was coming in on an odd angle, and pretty low.

Mr Hannah says it's effectively parallel with a grass area, where there are hundreds of people.