Tensions between China and Australia have been heightened recently after China signed a security pact with the Solomon Islands.
Australians will go to the polls in eight days to vote in a general election. Dutton said the timing of his announcement had nothing to do with the election campaign.
Australia's Defence Force identified the ship as a Dongdiao Class Auxiliary Intelligence ship named Haiwangxing.
“Australia respects the right of all states 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 Defence Force said in a statement. “Defence will continue to monitor the ship’s operation in our maritime approaches.”