The Defence Force is closely tracking a high-tech Chinese spy ship as it makes its way towards Australia ahead of this month's Talisman Sabre war games on the Queensland coast.

Key points: The electronic surveillance ship was believed to be north of Papua New Guinea on Saturday night

The electronic surveillance ship was believed to be north of Papua New Guinea on Saturday night It is believed to have begun its voyage south to Australia late last week

It is believed to have begun its voyage south to Australia late last week The same class of vessel was spotted monitoring the 2017 Talisman Sabre war games

Multiple military sources have confirmed to the ABC they are preparing for the imminent arrival of the Auxiliary General Intelligence (AGI) vessel, which is expected to closely monitor the massive biennial joint United States-Australian exercises from just outside Australian territorial waters.

On Saturday night, the Type 815G Dongdiao-class electronic surveillance ship was believed to be north of Papua New Guinea, having begun its voyage south towards Australia late last week.

The AGI is fitted with advanced communications systems designed to eavesdrop on other militaries, and is the same class of vessel which the ABC revealed had been monitoring the 2017 Talisman Sabre war games.

Up to 25,000 military personnel, mainly from the United States and Australia, are taking part in this year's activity, which is focused on the planning and conduct of mid-intensity "high end" warfighting.

"There is [an AGI ship] north of Australia at the moment," Chief of Defence Joint Operations, Lieutenant General Greg Bilton said at the Talisman Sabre launch in Brisbane.

"We're tracking it. We don't know yet what its destination is, but we're assuming that it will come down to the east coast of Queensland, and we'll take appropriate measures in regards to that.

"It is international waters, they have the right to sail there."

Last month the ABC revealed Japanese warships would also be taking part in Talisman Sabre for the first time, and defence sources believe the Chinese are particularly interested in how its Maritime Self-Defence Force operates with the ADF and the United States.

"This year's Talisman Sabre involves the Japanese Amphibious Rapid Deployment Brigade, which was created last year primarily as a response option for potential Chinese incursion in the Senkaku Islands", a military official told the ABC, speaking on the condition of anonymity.

"Their capability and interoperability with Australia and the United States will be of interest to Beijing."

This Chinese vessel fitted with communications systems was spotted off the Queensland coast during the 2017 war games. ( ABC News )

Lieutenant General Bilton would not comment on exactly how the ADF would respond to the presence of the ship.

"I'm not going to go into operational details, but we'll just take appropriate actions in regards to that vessel," he said.

"It's a vessel that collects information, so it's not a great threat but we'll take appropriate action."

In a statement, the Defence Department told the ABC it was "aware that there will likely be interest from other countries in exercise Talisman Sabre".

"These issues are taken into account during the planning and conduct of exercises," a spokesperson said.

"Any questions relating to the movement of PLA vessels in international waters should be directed to the Chinese Government."

Just last month three Chinese warships caught locals by surprise after arriving in Sydney harbour for a visit which was not publicly announced in advance by the Australian Government.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 40 seconds 40 s Chinese warships made a surprise visit to Sydney Harbour in June

In May, the ABC revealed the Australian Navy had been closely followed by the Chinese military during a recent transit of the South China Sea, near islands controversially claimed by Beijing.

The Defence Force later confirmed that Australian Navy pilots had been targeted by laser attacks in the disputed waters, with Chinese maritime militia vessels believed responsible.

Exercise Talisman Sabre, which is held every two years, will be formally opened in Brisbane on Sunday by the ADF's Chief of Joint Operations Lieutenant General Greg Bilton and United States Army Pacific's Commanding General 25th Infantry Division Major General Ron Clark.