The quake triggering a tsunami warning along the entire east coast, which was later downgraded.

In discussing fatalities New Zealand Prime Minister John Key told reporters in Wellington that: "We don't have any indications at the moment to believe it will rise, but we can't rule that out."

Key added that details of the casualties were still being confirmed.

He said a military helicopter was being dispatched to the coastal tourist town of Kaikoura, near the epicentre of the 7.8 magnitude quake, some 91 km (57 miles) north-northeast of Christchurch in the South Island.

Tsunami gauges at Kaikoura, 180 kilometres north of Christchurch, had recorded "a sizeable tsunami wave of around 2.5 metres", weatherwatch.co.nz reported about three-and-a-half hours after the quake struck.

"The tsunami gauges suggest perhaps an underwater landslide just off the Kaikoura coastline," weatherwatch said on its website. 

The quake, located 20 kilometres south-east of Hanmer Springs at a depth of 23 kilometres, struck just after midnight on Sunday and was felt as far away as Auckland.

The Ministry of Civil Defence and Emergency Management issued a tsunami warning for the South Island and later extended it for the entire east coast.  

The warning was later scaled back, reducing the area where such an event was likely to hit the coast.

Anna Kaiser, a seismologist at GNS Science said a tidal signal or surge of up to one metre had been recorded in North Canterbury region of the South Island.

"That's reasonably significant so people should take this seriously," she told Radio New Zealand.

"The first wave may not be the largest. Tsunami activity will continue for several hours," the ministry tweeted.

It said waves of three to five metres were expected in the north-east of the South Island and in the Chatham Islands.

The rest of the east coast would see one to three-metre waves.

It warned people to expect aftershocks and many had been felt with the largest a magnitude 5.6 tremor soon after the initial quake.

Some injuries had been reported but there no immediate reports of deaths.

Sydney Morning Herald journalist Saimi Jeong was in a hotel in Christchurch when the tremors began.

"I was in bed about to sleep when I heard the door start rattling. I thought someone was at the door trying to get in," she said.

"Then I felt the tremor - the bed was shaking, the floor was shaking. That's when it struck me that it was an earthquake.

"I could see the lamp and curtains shaking. It just kept going, and I wondered when it would finally stop."

Stuff.co.nz said residents in Christchurch's coastal suburbs were evacuating and moving to higher ground.

Hotels and occupied buildings in the CBD had been evacuated.

Many people were standing around in the middle of the street, away from buildings, calling people to let them know they were okay.

In Wellington, hundreds of people were on the streets as building alarms sounded and fire trucks and police cars headed to the CBD.

Near Civic Square, hotel guests huddled together in bathrobes while they waited for their buildings to be cleared. Windows in some high-rise office buildings had smashed, while plaster and masonry appeared to have fallen down from some buildings, Stuff.co.nz said.

Several roads around the South Island had been closed and damage to power and phone networks was reported.

Pictures shared on social media showed buckled roads, smashed glass and goods toppled from shelves in shops in Wellington and the upper South Island.

Fairfax New Zealand journalist Kirsty Lawrence was asleep in Palmerston North, on the North Island, when the earthquake struck. 

"I waited in bed for a moment but then it got louder and started growing in intensity," Ms Lawrence said.

"I was straight up and under a doorway. All our cupboards starting banging in the kitchen and stuff was falling all over on my dresser and car alarms were going off. And I'm up in Palmerston North so reasonably far from it and it was still huge. It went for so long."

A resident in the seaside Nelson suburb of Tahunanui said the power had been cut after the quake.

The tremor was felt across a large area, including Christchurch.

Christchurch is the biggest city on New Zealand's South Island. A 6.3 quake there in February 2011 killed 185 people and caused widespread damage.

New Zealand lies on the notorious Ring of Fire, the line of frequent quakes and volcanic eruptions that circles virtually the entire Pacific rim.

Stuff.co.nz, Reuters, AAP