Hartlepool, Redcar and Staithes Coastguard Rescue Teams attended the emergency on Sunday, as well as police and the North East Ambulance Service.
Davey Short, who had been walking along the beach, managed to pull one of the children – a boy – to safety on his second attempt.
“I realised something was not right because there was a woman screaming and shouting,” he said.
“I ran straight in and dived into the water, I got a bit scared myself and came back in a way to get my bearings.
“I wish I could have done more. I would do it again if I had to, I’m a dad with kids of my own.”
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