Police said at noon people in low-lying Otago coastal areas may be required to evacuate.
"Information suggests that it's possible that larger waves may hit the coast over the coming hours. The police want to ensure people will be safe rather than sorry, and ask that they take sensible precautions," said Dunedin Emergency Response Commander, Inspector Alastair Dickie.
People living in low-lying coastal areas should be aware they may be required to evacuate, Inspector Dickie said.
South Otago police were also patrolling around beach areas to ensure that people stayed away from the coast.
Dunedin police closed city beaches this morning and began patrolling the coast after a tsunami alert for New Zealand's east coast. Authorities said there was no threat to the Otago coastline but warned of strong currents and unusual tidal effects over the following 12 hours.
Police staff were stood down at about 4.45pm, based on information from the Ministry of Civil Defence.
Otago Daily Times photographer Craig Baxter said the handful of swimmers at St Clair's Salt Water Pool at 8.45am were unaware of the tsunami alert shortly before police closed city beaches.
Several immediately left the pool after being informed of the situation.
A lifeguard at the pool told Mr Baxter he was keeping a watching brief and would evacuate the pool if necessary.
A 20cm wave hit the Chatham islands at 7.53am and the wave was expected to reach Dunedin at 9am.
Shortly after 9am, Mr Baxter said he saw a slight surge on St Clair beach after the water "went quite calm".
The water retreated "a couple of metres" and then small surge came back in, he said.
Dunedin civil defence chief Neil Brown told the Otago Daily Times this morning there was no threat to the city after a massive earthquake in Chile triggered Pacific tsunami warnings.
"I would be very surprised if anything was noted on the shoreline here. From very early on it was obvious the risk to Dunedin was nil," Mr Brown said.
"The maximum height predicted was less than a metre, and the time of arrival was approaching low tide. There is no on-shore affect with a 1m wave because it's within the range of the tide."
Mr Brown said even at high tide a 1m wave would not affect any property in Dunedin.
No civil defence action is being taken in the city.
Mr Brown assured the ODT that if there had been any risk then "quite significant" steps, including broadcasts, warnings and restricted access to beach areas, would have been initiated.
At Warrington surf lifesavers evacuated the beach and nearby camping area at 8.30am. A large crowd of sightseers had gathered at high points along Warrington's Esplanade to watch for waves arriving at the beach.
Further north at Hampden camping ground about 60 campers evacuated themselves to high ground about 7am.
At Taieri Mouth, commercial fisherman Gary Homan reports he has been receiving warnings about a possible tsunami since about 3.30am.
He had immediately driven to the wharf at Taieri Mouth to tie up his fishing trawler with stronger ropes.
An hour after the tsunami was due to hit the Chatham Islands, residents saw big changes in water level, but no big wave.
Chatham Islanders took to what little high ground there is, after warnings that a major earthquake in Chile overnight had generated a tsunami.
One resident said sea levels had changed dramatically.
"Everyone's gone to higher ground we are on higher ground but we've got a perfect view of the bay," Chris told NZPA. She did not want to give her surname.
"The water is starting to disappear from round the bay, all the rocks are uncovered, the water is definitely moving out. Now the rocks are covered up again. There's no big wall of water yet. It looks very unusual, very unusual.
"It's kind of high tide here at the moment but sort of in no time the rocks became uncovered but they're covered up again. It's (happening) very slowly."
Everyone was relatively safe and all the civil defence mechanisms were in place, she said.
There was tension as residents waited to see if the tsunami would actually hit. "Everybody looks a bit awe-struck like: 'is it really going to happen'. The rocks are all covered up again now and no big wall of water. But it is quite amazing to watch how fast it all went out."
"They're not nervous or scared because they're all well-prepared."
The quake hit 325 kilometres southwest of Santiago, at a depth of 35 kilometres at 3:34 am local time (6.34pm NZ Time), the US Geological Survey reported.
A wave measuring 2.34 metres was recorded near Chile and Tsunami warnings were issued over a wide area.
The New Zealand Ministry of Civil Defence and Emergency Management (CDEM) said areas of land could be threatened on the Chatham Islands and Banks Peninsula, while waves of less than 1 metre were likely for the entire east coast of New Zealand.
People on coastal areas were asked to stay off beaches, avoid the water (including rivers and estuaries) and refer to media or their local Civil Defence authorities for updates.
The ministry asked that people avoid calling 111 for information, reserving that number for emergencies.
Estimates showed the first wave reaching the east coast of the North Island by 8am ahead of the main centres of Wellington (8.25am), Christchurch (9.05am) and Auckland (10.22am).
"The first wave may arrive later and may not be the largest. Strong currents and unusual tidal effects may continue for several hours," the ministry said.
"Based on historical events it is expected that the greatest wave heights could occur between 6 and 12 hours after the initial arrivals."
The Pacific Tsunami Warning Centre issued a Pacific-wide tsunami warning for countries in Latin America, and as far away as the US state of Hawaii as well as Japan, Russia, Philippines, Indonesia and the South Pacific. French Polynesia was also put on alert.
"Chile probably got the brunt force of the tsunami already. So probably the worst has already happened in Chile," said Victor Sardina, geophysicist at the warning centre.
"The tsunami was pretty big too. We reported some places around 8 feet. And it's quite possible it would be higher in other areas," he added.
An earthquake of magnitude 8 or over can cause "tremendous damage," the USGS says. The quake that devastated Haiti's capital Port-au-Prince on January 12 was measured as magnitude 7.0.
