Airservices Australia has revealed that a Virgin Airlines pilot was the first to spot three Chinese warships off Australia's east coast last week.

Sailing in Australia’s exclusive economic zone, the three vessels were not breaking international law, but they were unusually far south on an undeclared mission.

Three Chinese warships have been spotted in international waters off the coast of Australia’s largest city, Sydney, in a rare show of military might that will likely test diplomatic ties between Canberra and Beijing.