"We are aware of reporting from the New Zealand Defence Force that the Chinese naval Task Group has advised of a second window for live firing activity, on Saturday afternoon New Zealand time," Collins said.
"We have had confirmation that personnel on Navy frigate HMNZS Te Kaha observed live rounds being fired from the Zunyi's main gun, as would be expected during the course of such an exercise."
Collins added the Chinese naval Task Group had advised of its intent to conduct live firing via radio channels.
"Defence is working with the NZ Civil Aviation Authority to ensure all aircraft are notified.
"The safety of all people, aircraft and vessels in the area remains our paramount concern.
"To that end we continue to be in close contact with Australian authorities."
The concerns regarding notification times and best practice when undertaking military exercises stood, and would be communicated appropriately, Collins said.
Luxon: China acting within international law
Earlier, Prime Minister Christopher Luxon said China did not inform New Zealand about their warship activity in the Tasman Sea before an apparent live fire training on Friday.
In remarks to media today, Luxon said the Chinese warships in the Tasman were different from what they had seen before.
"It comprises of a destroyer or a cruiser, and a frigate, and a refueller."
A furore broke out on Friday, after commercial airline staff picked up unexpected radio messages from Chinese navy ships in the Tasman Sea, warning them to divert from an area between New Zealand and Australia where military drills were being carried out.
Several airlines confirmed they had rerouted, changed their flight paths or were monitoring the situation.
But there had been no earlier formal warning from Chinese authorities - as would usually be expected - that the exercises were planned, New Zealand Minister of Defence Judith Collins and Australian Defence Minister Richard Marles have said.
RNZ has sought comment from Collins and the New Zealand Defence Force.
New Zealand Navy frigate Te Kaha has been "shadowing" the Chinese ships, and saw behaviour "consistent with a live fire activity", The Sydney Morning Herald reported.
The Kiwi sailors saw a floating target deployed and recovered by the Chinese crews, but "did not report observing any fires on the target and said there was no indication of any surface-to-air firing" the SMH reported.
Top political figures from New Zealand and Australia said the Chinese ships were being monitored closely and more information was being sought, but stressed that live fire had not been confirmed to have happened.
'Unsatisfactory' answers
Australia's military remains monitoring the ships after were spotted moving down the coast about 280km east of Sydney, in international waters, on Thursday.
Foreign Minister Penny Wong met with her Chinese counterpart and demanded answers as to why they only offered short and limited notice before the firing was carried out, AAP reports.
China's actions are believed to have complied with international law and Australia's defence force has advised of no imminent threat to its or New Zealand's assets, with the activity most likely finished.
But Defence Minister Marles declared the answers given by China were "unsatisfactory".
"An issue here was that the live firing that was notified by China ... they notified a live firing exercise, but with very short notice, which meant that was very disconcerting for planes that were in the air," he told Channel Seven.
"There was never any prospect of people being in danger, but this is obviously a very disconcerting set of circumstances, and while it is compliant with international law, the notice was short, at least relative to what we would do in this circumstance."
Australia has coordinated its response with New Zealand but has not spoken with key ally America after the incident, Marles said.
Qantas, Emirates and Air New Zealand modified flight paths between Australia and New Zealand after receiving reports of live firing in international waters.
A Defence spokesperson said China advised by a verbal radio broadcast on a civilian it would carry out its drill.
"(China) did not inform Defence of its intent to conduct a live fire activity, and has not provided any further information," a statement read.
"That formation has now reverted to normal indicating that the live fire activity has most likely ceased … no weapon firings were heard or seen; however, a floating surface firing target was deployed by (China) and subsequently recovered."
Australian officials said it was customary to give 24 to 48 hours notice of live fire activity.
New Zealand's Defence Minister Collins said the drills were the "most significant and sophisticated" seen in the region and they had been tracking the Chinese warships for a number of days, she said.
Analysts believe the sailing is an attempt by Beijing to project power and send a message to Canberra about China's capability.
The sailing follows a run-in with the Chinese military last week, when a fighter jet fired flares in front of an RAAF surveillance aircraft during a patrol over the South China Sea .
The Albanese government lodged a complaint with Beijing over the near-miss, fearing for the lives of the Australian personnel.
- RNZ and AAP
