The Defence Force has confirmed the three Chinese ships off the coast of Australia have moved inside the Australian exclusive economic zone this morning.
The ships have been in Australian waters since last week.
Defence said they were seen from the HMNZS Te Kaha and Seasprite helicopter and were moving west, south of Tasmania.
The New Zealand Defence Force is working with their Australian counterparts to monitor the ships.
Meanwhile, Director-general of the Office of National Intelligence (ONI) Andrew Shearer has delivered a blunt assessment of Beijing's strategic aims for sending the heavily armed flotilla to the region, saying it was to "shape" the behaviour of states like Australia, ABC reported.
Appearing before a parliamentary committee on Monday night, the ONI boss observed this was "the furthest south a People's Liberation Army-Navy (PLA-N) task group has operated".
"We judge Beijing intends to normalise this sort of presence, shape the responses of those in the region, and observe and learn from our reactions," he told the Senate estimates hearing.
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"The largest and least transparent military build-up since the Second World War will mean the PLA will be able to operate at greater distances from mainland China, in greater numbers, including into Australia's immediate seas and skies," he said.
On Tuesday, Defence confirmed the PLA-N flotilla had re-entered Australia's exclusive economic zone, where it was being closely tracked as it operated around 160 nautical miles east of Hobart.
One military figure, not authorised to speak publicly, told the ABC there was a "working assumption" that a taskforce comprising three warships so far from the Chinese mainland for weeks could have submarine support for at least part of the deployment.
Other navies that boast nuclear-powered submarines, such as the United States and the United Kingdom, are known to regularly use them during lengthy and complex warship missions to gather valuable intelligence on potential adversaries.
Meanwhile, commercial airline pilots who flew over the Tasman Sea last week have told the ABC they monitored radio communications from the Chinese warships to military surveillance aircraft as far back as a week ago, warning about possible live-firing activity.