Canberra: Underlining the security threat from Beijing, Australian Prime Minister Scott Morrison has said the reports that a Chinese spy ship circled Australia's coast earlier this year highlights the "very serious situation" in the Indo-Pacific region.

This comes after reports emerged in the UK that the Chinese vessel had been spotted circling Australia's coast for three weeks in August and September, collecting electronic intelligence as it travelled past sensitive military installations, Australian website news.com.au reported.

The report first published in The Daily Telegraph said that the Chinese vessel -- capable of monitoring communications and radar signals -- was a Dongdiao-class ship. It is similar to the one which monitored the military exercises between Australia and the US earlier this year.

"I think the presence of the Chinese Navy - which we were aware of, and they were keeping a close eye on us and we were keeping a close eye on them - the importance of that is to highlight Australians that there is a very serious situation in the Indo-Pacific," Morrison told reporters in Adelaide on Friday.

"They have every right to be where they are. We knew they were there. They are able to be there under international maritime law. But don't think for a second that we were not keeping an eye on them as they were seeking to keep an eye on us."

Australia has to be able to stand up, and that requires great strength, Morrison added. "I have been criticised by many for the strong stance I have taken on this issue," he said.

The UK publication said that the ship entered Australia's 200km exclusive economic zone off the coast of Darwin in August before slowly heading south, hugging the coastline.

According to reports, the vessel monitored a number of crucial military training areas as it travelled as far south as Sydney, before heading across the Tasman towards New Zealand.

The reports in the Australian publication said that China routinely sends spy ships to monitor military exercises near Australia, including in 2017 and 2019. However, the latest appearance was reportedly considered unusual as there were no exercises or war games taking place.

Confirmed the sighting of the Chinese vessel, Australian Defence Minister Peter Dutton said: "they didn't break any laws". "It was not the first time. As you're aware during Operation Talisman Sabre, which was a big training exercise up off the Queensland coast, the PLA had deployed some vessels up there as well. So they will be involved in intelligence collection, signals collection," he told Nine's Today program.