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Stolen ute driving on wrong side of Princes Highway before fatal crash

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A stolen ute that smashed at high speed into a vehicle in Sydney's inner west early on Thursday morning, killing two men, had crashed into another car minutes earlier while travelling on the wrong side of the highway.

The driver of the grey four-wheel-drive ute has been arrested and is being treated in hospital following the fatal crash at the intersection of the Princes Highway and Canal Road in St Peters just after 4.30am. 

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Two people are dead after a two-car collision on the Princes Highway in the Sydney suburb of St Peters. Vision: Channel Seven

Earlier in the morning, police had been pursuing the ute through Sydney's inner east, but terminated the chase when it became too dangerous.

One motorist said the ute "almost took me out" in Waterloo as it sped past him.

In the following minutes, the stolen ute is believed to have travelled to Sydenham, where it was seen travelling on the wrong side of the Princes Highway.

The ute crashed into a vehicle near the highway's intersection with Railway Road, injuring a man, before continuing north on the highway.

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The ute was not being chased by police at that time, but it is understood a police car was positioned near the highway's intersection with Canal Road.

The ute sped past the police car and crashed into a blue Hyundai sedan, which was carrying two men.

One of the men in the Hyundai died instantly, while the second suffered critical injuries. NSW Ambulance paramedics took that man to Royal Prince Alfred Hospital, where he died a short time later, police said.

The driver of the stolen ute suffered leg injuries but survived the crash, and was arrested at the scene. 

A NSW Ambulance spokesman confirmed that paramedics were called to the Princes Highway at Sydenham, near the intersection with Railway Road, to treat a man suffering neck pain in a crash early on Thursday morning.

That driver was taken to Royal Prince Alfred Hospital for treatment.

One witness said he saw the ute earlier in the morning being chased by police through Waterloo. He claimed the ute "almost took me out".

"I stopped my car and noticed 10 police cars giving chase. It started near Waterloo. Devastating news to hear how it's ended," he said.

The wreckage of the ute came to rest across the highway's intersection, its front severely damaged, while the blue sedan had mounted the curb.

Police initially covered the rear of the sedan with a white sheet, before erecting a tent over the wreckage. Clothes and wreckage were strewn across the road.

A critical incident investigation has been launched into the circumstances of the crash, police said. That investigation will be overseen by officers from the Professional Standards Command.

The highway's city-bound lanes and one south-bound lane were closed throughout the morning peak, before re-opening about 10am.

Police urged motorists to avoid the highway, one of the major routes into the city from the south.