The three warships that carried out drills last week were being monitored about 300km east of Hobart, the Defence Department said.
The Australian and New Zealand defence forces continued to track the People's Liberation Army-Navy flotilla "in the vicinity of Australia's maritime approaches" after they re-entered Australia's exclusive economic zone in the early hours of Tuesday.
"Australia expects all militaries operating in the region to engage transparently, maintain the highest standards of safety and professionalism, and we encourage all states to maintain open communication to ensure their actions support regional security and stability," Defence said in a statement.
"We respect the right of all states under international law to exercise freedom of navigation and overflight in international waters and airspace, just as we expect others to respect our right to do the same."
The flotilla continued its way along Australia's east coast as Airservices Australia representatives told a parliamentary hearing that 49 flights had to be diverted last Friday after the Chinese navy's broadcast that it was undertaking hazardous activity in the busy airspace.
Nationals senator Bridget McKenzie on Monday evening grilled officials on the chronology of events.
Airservices Australia chief executive Rob Sharp confirmed his organisation became aware of the risk to aircraft at 9.58am on Friday.
"It was in fact Virgin Australia advising that a foreign warship was broadcasting that they were conducting live firing 300 nautical miles (556km) east of our coast," he said.
"That is how we first found out about the issue."
Mr Sharp said within two minutes, by 10am, air traffic control commenced a hazard alert to let all flights in the area know there was danger.
Deputy chief executive Peter Curran said the Virgin pilot had received the transmission on an emergency frequency monitored by pilots - but not air traffic control.
"We cannot hear what was said, and the pilot of the Virgin aircraft heard what was said from the Chinese vessel, relayed it to air traffic control, and air traffic control passed that through our system and started giving hazard alert into all the aircraft on the frequency," he told the hearing.
Mr Curran said just after 10am the organisation's national operations centre contacted Defence Joint Operations Command to advise of the situation.Â
He said Airservices Australia was not sure if it was a potential hoax or real, but that the information was passed on.
Mr Curran said the usual notice period for a military to provide an alert about activity was 24 to 48 hours.
In response to the reports, Prime Minister Anthony Albanese reaffirmed the Australian military was aware soon after the alert was received.
"I've spoken with the chief of the defence force about what has occurred," he told reporters.
"Australia has had frigates both monitoring by sea and by air."
The live-fire exercise follows a run in with the Chinese military earlier in February, where a fighter jet fired flares in front of a RAAF surveillance aircraft over the South China Sea.
