Australian police said the man was feared to have gone missing after taking a skinny dip with friends at the famous Bondi Beach early on Tuesday.
The group went into the water around 3:50am.
They only realised one of their number was missing when they returned to shore.
“They alerted police when they noticed one of their mates, aged 25, was not with them after the swim, and his clothes and personal belongings were still on the beach,” a police spokesman said.
“A major search was launched involving local police, the New South Wales Ambulance helicopter, Surf Rescue New South Wales and Water Police.
“The search continued until members of the public called local police about 4:40am, reporting a naked man was walking along Military Road at North Bondi.
“Officers picked the man up and took him back to Bondi Beach where it was confirmed he was the man feared swept out to sea.
“He was checked by paramedics as a precaution before being reunited with his clothes and friends.”
The Bondi suburb is popular with British backpackers thanks to its vibrant nightlife, 900m-long sandy beach and surfing waves.
Authorities warn swimmers that rip tides are always present and the beach is not patrolled after dark.