Defence officials have had to allay the concerns of Sydney office workers, who watched as an air force fighter chased what appeared to be a passenger plane.

Some people thought Australia's most populous city might be coming under attack.

Instead the Australian Defence Force was bidding farewell to one of its aircraft.

The media had been alerted about the fly-past over Sydney harbour bridge but not, apparently, the public.

A number of office workers decided to evacuate their skyscrapers after watching in alarm as a passenger plane flew low over Sydney harbour chased by an air force fighter.

After flying over the city the planes banked over the coast then headed back towards the central business district.

One eyewitness said the sight and sound of the planes was "terrifying".

Another said he'd never been so scared.

But rather than witnessing the pursuit of a hijacked plane, the office workers were watching a farewell flight.

One of the defence force's Boeing 707 aircraft was being retired from service, shadowed by a hawk fighter from which aerial photographs were being taken.