The 46-year-old man was found floating in the water after the boys were pulled from the surf, the Milton Ulladulla Times reported. Efforts to revive him failed.
The family was at the beach near the entrance to Burrill Lake, a resort area 144 miles south-southwest of Sydney. A Filipino visitor drowned at the same beach in December.
Glenn Matthews, director of the South Coast branch of Surf Lifesaving, said everyone needs to be conscious of safety precautions, the South Coast Register reported.
"This is a sad end," he said. "The message here is to please swim between the flags of patrolled beaches and learn to identify rips and currents and how to escape one."