To mark the 70th anniversary of the event -- which sparked public hysteria in the city -- New South Wales Environment Minister Robyn Parker said controlled diving would be allowed.
"Diver access will be on a trial basis and the move is strongly supported by both the Commonwealth and the Japanese governments," she said in a statement.
The lethal assault came in 1942 after a Japanese reconnaissance flight reported Allied warships were anchored in Sydney harbour.
The commanding officer of a flotilla of five large submarines cruising off the city decided to attack with three midget submarines, each with a two-man crew.
They avoided the partially constructed Sydney harbour anti-submarine boom net and attempted to sink the warships but were detected and attacked, with two of the crews scuttling their boats and committing suicide.
The third submarine tried to torpedo the heavy cruiser USS Chicago, but instead sank the converted Australian ferry HMAS Kuttabul, killing 21 sailors.
The scuttled vessels were recovered by the Allies, but the third one slipped out of the harbour and its fate was unknown until 2006 when scuba divers discovered it off Sydney's northern beaches. It will now be opened to divers.
The craft is believed to contain the remains of the two crew and personal items such as samurai swords, good luck charms and board games, as well as unexploded demolition charges buried safely under sand.
An exclusion zone, monitored by long-range cameras, is currently in place around the submarine. Parker said anyone caught damaging or removing part of the wreck would face penalties of up to Aus$1.1 million (US$1 million). (AFP)
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