A major operation using specialist equipment and resources in and over the water, on land, and with drones continued throughout Thursday.
The families of two people who had been unaccounted for following the incident have been informed of the latest development. They are being supported by specially-trained officers but formal identification has yet to take place.
Chief Superintendent Dan Evans said: “This is an extremely distressing incident and our thoughts are with all of those involved and their loved ones, who we are working closely with to offer help and support wherever we can.
“Every effort has been made to locate the two people who remained unaccounted for as fast as possible.
“Tragically, we can confirm that the bodies of two people were located and recovered this afternoon.
“Our priority is to support their families.”
There was no official confirmation from the police of reports found elsewhere in the media and a message posted earlier by the Marine Accident Investigation Branch (MAIB) that the people involved were “disabled”.
A large-scale response from emergency services was launched at around 1.30pm on Wednesday.
Police, fire and ambulance services, the air ambulance, HM Coastguard and search and rescue teams all attended the scene.
Two people were removed from the water and taken to Derriford Hospital for treatment.
One person has since been discharged and one person remains in hospital in a critical condition.
Two other people were removed from the water and checked by ambulance teams before being discharged at the scene.
No other boats were involved in the incident.