Their rental car, a silver Commodore station wagon, was found nearby in the popular beach’s car park.
Further personal belongings, including travel documents, were found in the vehicle.
Police and emergency services have been searching water and land for the pair since Monday but there has been no sign of them.
The two men are believed to have arrived in the area on Sunday.
New South Wales Police Inspector Michael Aldridge told Port Macquarie News that the conditions in the water had been “terrible”.
He said the chances of surviving in the water since Sunday were slim.
Detectives are now appealing to anyone who may have seen the two men or their rental car near the beach or surrounding streets to get in touch.
Hugo Palmer, who is understood to be from East Sussex, is described as being of Caucasian appearance, with fair hair, about 5ft 9ins tall and of athletic build.
Erwan Ferrieux has dark hair, brown eyes, a tanned complexion, and is between about 5ft 7ins and 5ft 9ins tall.
Police did not disclose how long Mr Palmer and Mr Ferrieux had been in Australia.
A spokeswoman for the Foreign Office said: "Our staff are in contact with police in Australia and the UK following reports of a missing British man at Shelly beach, New South Wales."
Anyone with information is urged to contact Crimestoppers by calling 1800 333 000 or visiting https://nsw.crimestoppers.com.au.
New South Wales Police reminded the public not to report crime via its social media pages.
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