The epicenter of Monday morning's quake was near the town of Rabaul in the northeast of Papua New Guinea, the US Geological Survey (USGS) said. The monitor initially reported a 7.7 magnitude earthquake but later downgraded it to 7.5.
The Pacific Tsunami Warning Center in Hawaii said "hazardous tsunami waves are possible for coasts located within 1,000 km of the earthquake epicenter along the coasts of Papua New Guinea and the Solomon Islands".
The powerful quake struck at a depth of 40km and was followed by two further offshore earthquakes in the vicinity which measured 5.7 and 5.0 respectively.
In Rabaul, residents noticed the sea level rose slightly, prompting ocean water to flood the parking lot of a shopping center near the beach, the Associated Press news agency reported.