The bite crushed his face mask and broke his nose, Dennis Luobikis, a fellow diver and friend, said.
"He was actually bitten by the head ... the shark swallowed his head," he said, adding that the shark took a second bite out of Nerhus, clenching a jaw around his torso.
Luobikis said the brunt of the second bite was taken by Nerhus's weight vest made of lead.
Nerhus fought frantically to free himself from the shark's jaws and was eventually pulled back on board his boat by his son.
"He pushed his abalone chisel into its head while it was biting and it let him go and swam away," Luobikis said.
Sharks, including great whites, are protected in Australia.
Scientists say an average of 15 shark attacks occur in Australia each year - one of the highest rates in the world - and about one each year is fatal.