Australian east coast on tsunami alert after NZ earthquake

Sydney and Australia's south-east coast has been put on alert following a powerful undersea earthquake.

The Australian Bureau of Meteorology says Tasmania, Victoria and NSW could be hit by dangerous waves on Wednesday evening following the quake off the southwest coast of New Zealand's South Island at 7.22pm (AEST).

The Joint Australian Tsunami Warning Centre is warning of dangerous waves from Gabo Island north to Seal Rocks, including Sydney Harbour and Botany Bay.

Although evacuations are not required, the centre warns people to move away from the immediate water's edge and not go to the beaches to look at the waves.

Lord Howe Island is facing a more serious threat of major land inundation and residents are urged to go to higher ground or at least one kilometre inland.

The Joint Australian Tsunami Warning Centre said a tsunami has been observed at Port Kembla at 10:06pm.

Earlier this evening, a Bureau of Meteorology said it remained a possibility waves could develop and hit Australia's coast.

"It's quite rare that this would happen. At the moment no waves have been recorded but an alert has been issued for NSW and large parts of the east coast,'' she told AAP.

"We're continuing to monitor and update the situation.''

The Bureau of Meteorology (BOM) said any waves would strike Lord Howe Island between 9.30pm Wednesday and midnight.

In Sydney a performance of Princess Cabaret at the Bondi Pavilion was cancelled after the tsunami warning and all theatregoers ejected from the beachfront venue.

The US Geological Survey said the epicentre of the earthquake was about 160km west of the city of Invercargill, on South Island, at a depth of 33 kilometres, US Geological Survey (USGS) reported.

Police in the town of Tuatapere on South Island say they have reports of minor cracks in buildings and stock falling from supermarket shelves, but there'd been no reports of serious damage or injuries so far.

The quake was felt widely across the South Island.

The Hawaii-based Pacific Tsunami Warning Centre also issued a warning, saying: "An earthquake of this size has the potential to generate a destructive tsunami that can strike coastlines in the region near the epicentre within minutes to hours''.