The long, rolling earthquake at a depth of 12km caused minor damage throughout the southern half of the island.
A 6.1 magnitude aftershock 20 minutes later was felt as far north as Wellington.
Civil Defence officials issued a "potential tsunami" advisory for New Zealand soon after the event.
Late last night, Southland's Civil Defence Emergency Operations Centre group controller Neil Cruickshank said the centre was monitoring the situation in Bluff and a destructive tsunami was very unlikely.
"We urge people to stay away from the immediate foreshore as a precaution. Our advice is that people do not need to evacuate their homes," he said.
The Pacific Tsunami Warning Centre in Hawaii cancelled its earlier tsunami warning for New Zealand, while Civil Defence authorities said only a small wave was generated.
Deep Cove Outdoor Education Trust, which owns a hostel in Doubtful Sound, had no immediate reports of damage, chairman Paul Gay said last night.
The hostel had no land-line so Mr Gay called the relieving manager and his wife, who were based at the hostel, through the internet.
They "were scared" and had hidden under the kitchen table but were fine, he said.
The couple had "heard water swishing in Doubtful Sound and some loud bangs".
"They deduced slips had come down," Mr Gay said.
Kirsty Macnicol, editor of the Fiordland Advocate in Te Anau, said the quake was "really prolonged".
"Pictures were swinging on the walls, and the glassware was rattling," she said.
Te Anau resident Carolyn Porteous said she and her husband were in bed and were woken by what sounded like thunder as framed photos fell off their walls and smashed.
"It felt like it was right underneath us. It woke us up - we felt like the whole house was moving."
The movement was like jerking and lurching and the doors were swinging and slamming shut.
Manapouri Motels and Motor Park owner Joelle Nicholson said her two-storey house was "swinging and swaying" during the earthquake.
She stood under a door frame.
Meridian Energy spokeswoman Clare Shaw said seismic alarms at the Manapouri Power Station did not indicate a level which would require the station to be checked.
It was likely the station would be checked this morning.
Tuatapere's Waiau Hotel patron Ray Seebeck said bottles remained on the shelves and just a small crack had appeared in a wall.
He described it as "awesome" and "like ballroom dancing".
Most bottles stayed on their shelves at Te Anau Liquor Supply Ltd.
Owner Judy Carson rushed from her home concerned about how her store had fared in the quake.
"I can't believe it myself," she said.
The Department of Conservation had received no reports of damage to any of its huts in the area.
"It was a rolling [earthquake] and won't cause any damage," Doc Wakatipu Area Office manager Greg Lind said last night.
"There were no sharp jolts, which cause the damage."
Invercargill police said there were reports of power lines down in the suburb of Otatara.
Senior Sergeant Olaf Jensen said no other damage had been reported and he was not aware of infrastructure issues.
Staff in the station felt a "long and rolling earthquake".
Senior Sergeant Brian Benn, of Dunedin, said a few burglar alarms were set off by the earthquake, but as of 10pm no reports of other damage had been received.
