A magnitude-7.4 earthquake off Papua New Guinea has generated a small tsunami and caused minor damage to buildings in the town of Kokopo in East New Britain province.

There have been no reports of injuries or major damage to infrastructure.

The earthquake hit at 11:44am (AEST), with an epicentre 139 kilometres south of Kokopo and a depth of 40-50 kilometres.

A tsunami warning for "hazardous" waves was initially issued for islands within 300km of the epicentre, but "the tsunami threat has largely passed," according to the Pacific Tsunami Warning Centre's (PTWC) latest advisory.

The US Geological Survey (USGS) measured the earthquake at magnitude-7.4 but the PNG Geophysical Observatory Office said it was a magnitude-7.2.

"[Tsunami] waves were observed in Rabaul from about 12:15(pm) for roughly an hour," said Chris McKee, assistance director at the office.

"The sea receded first and then came back in and they saw several cycles of tsunami action in Rabaul harbour."

He said tsunami waves of less than 50 centimetres could have reached as far as the PNG mainland, about 450 kilometres away.

PNG's prime minister Peter O'Neill was briefed by East New Britain governor Ereman Tobaining and said the Provincial Disaster Office was monitoring the situation.

"In our island regions people have to be particularly vigilant for the potential of tsunamis," Mr O'Neill said.

"I call on local leaders to ensure you communicate with your people and in particular continue to education children on the warning signs."

East New Britain is located on the seismically volatile Pacific "Ring of Fire", which has been active in the last week.

There was a magnitude-6.7 earthquake on Thursday night and a magnitude-6.8 tremor on Friday night.

"This latest event from the same area is probably a new rupture but there will be a merging of the aftershock sequences … so we expect aftershocks will continue for some time - days maybe even weeks," Mr McKee said.

The island, the largest of the Bismarck Archipelago, is east of mainland PNG and has a population of about 500,000 people.

Extent of damage not yet clear

Local residents of Kokopo said the earthquake hit with enough force to knock items off supermarket shelves.

"There's been a landslide on Vunabakut Hill next to the market, it's blocked off the road going up to that hill," said Kokopo resident Carole Cholai.

She said schools and businesses had closed, and the electricity was off.

Mr Maki said there were reports of cracks in buildings in Kokopo but the extent of the damage was not clear.

A staff member at the nearby Rabaul Hotel said there had been no major damage reported in their area.

The closest populated area near the earthquake's epicentre was Pomio but the ABC has not been able to speak to any residents there.

Zenia Lopez, a worker at the Kokopo Village Resort, said she ran outside when the quake struck.

"It was frightening, we all ran outside, but the place is okay, there is no damage," she said.

"We are still waiting to hear when the tsunami warning is lifted, but there are no signs of any unusual waves so far."

Joint Australian Tsunami Warning Centre co-director, Daniel Jaksa, said he was not anticipating the tremors would cause serious damage to areas close to the epicentre.

"This region of Papua New Guinea is very, very sparse in population," he said.

"We wouldn't expect anything to happen there."

ABC/wires