Peter Dutton says Defence monitoring Chinese spy ship Haiwangxing off Western Australia

Mr Dutton said the patrol was hugging the WA coastline, had entered the Australian exclusive economic zone and was making its way towards Darwin.

It was unusual and "without precedent" for a Chinese navy ship to travel so far south, he said.

"It is an aggressive act and I think particularly because it has come so far south," Mr Dutton said.

"Its intention is to collect intelligence right along the coastline and has been in close proximity to military and intelligence installations on the west coast of Australia."

The Defence Minister on Friday afternoon said the vessel at 6am was 250 nautical miles north-west of Broome and tracking north-east at 12 knots.

Mr Dutton said the vessel would aim to spy on the Harold E Holt communication station and other military installations on the west coast.

"It is unusual in terms of the way in which it has come so far south and the way in which it's hugging the coastline as it heads up in the direction of Darwin," he said.

"We'll continue to monitor that. We've obviously had a number of aircraft that have been involved in the surveillance of this particular vessel.

"It's unusual that there wouldn't be notice given to the Australian authorities about the activities and the particular course that this vessel was taking."

The Defence Department said defence forces were aware of a People's Liberation Army-Navy intelligence collection vessel, a Dongdiao Class Auxiliary Intelligence ship named Haiwangxing, operating off the north-west shelf of Australia.

The Haiwangxing travelled down the west coast of Australia to the vicinity of Exmouth, before changing course and tracking east along the north-west coast, it said.

Defence was monitoring the vessel with a combination of air and maritime capabilities.

Earlier, relations with China dominated the National Press Club debate between Labor foreign affairs spokeswoman Penny Wong and Foreign Minister Marise Payne.

Asked what Australia should do to de-escalate tensions with China, Senator Wong said it was more important to shape the Indo-Pacific region than focus on the relationship with China.

READ MORE:

"Whilst we might not be able to change China, and it's how they choose to engage with us, what we can do is focus on building the sort of region we want and we want a region which is peaceful, prosperous, stable, and in which sovereignty is respected," she said.

Senator Payne said Australia was protecting its national interests and national security.

"We will always put forward first and foremost for our nation and our people. We will work closely with our partners as we have to secure and pursue the security the prosperity and stability of the Indo-Pacific region.

"But overall, we will continue to seek a constructive relationship with China but it has to be a relationship in which our sovereignty and our interests are respected."