The so-called freedom of navigation operation, undertaken by the USS William P. Lawrence saw the guided missile destroyer sail within 12 nautical miles of  the Chinese-occupied Fiery Cross Reef to "challenge excessive maritime claims", the US Defence Department said.

China's defence ministry denounced the "provocative" move as an "illegal" threat to peace which only showed that its construction of defence installations in the area was "completely reasonable and totally necessary". It said the US destroyer was trailed, monitored and issued with warnings to leave by two J-11 fighter jets and three warships of its own.

The manoeuvre was the third such operation conducted by the US Navy in less than seven months, designed to assert and demonstrate the right to fly and sail through what is considered international waters and airspace, as tensions ratchet ahead of an imminent international arbitration requested by the Philippines, which is contesting China's claim to more than 80 per cent of the South China Sea. China has refused to acknowledge or participate in the arbitration, arguing the tribunal lacks jurisdiction and that disputes should be resolved bilaterally.

Extensive land reclamation and construction, including airstrips and other features capable of being militarised, on reefs claimed in the South China Sea by China has seen tensions rise among rival claimants and other countries in the region.

Australian Defence Minister Marise Payne said she supported the US operation which underlined the right of all states under international law to freedom of navigation and overflight.

Chinese foreign ministry spokesman Lu Kang said the flexing of US military muscle "in the name of freedom of navigation" was the biggest threat to peace and stability in the area. The warship "threatened" China's sovereignty and put staff and facilities on the island at risk, and represented "a naked challenge" to the maritime order, he said.

The US operation comes after weeks of escalating military posturing in the waters. China's top-ranking general, Fan Changlong, toured Fiery Cross last month; days later, US Defence Secretary Ashton Carter visited an American aircraft carrier in the South China Sea. A troupe of military entertainers also descended on Fiery Cross and performed patriotic songs to military personnel stationed on the reef.

The election of combative politician Rodrigo Duterte as Philippine president on Monday also threatens to throw a wild card into the mix.

The US reportedly cancelled a scheduled freedom of navigation operation last month, instead opting for an air patrol over the Scarborough Shoal in an attempt to demonstrate resolve over possible intensifying large-scale construction activity by China in that area.

However, the resort to a third freedom of navigation operation in the Spratlys was unlikely to stem internal criticism of the Obama Administration's approach, including its preference "for the least assertive form" of surface operation, according to Euan Graham, writing in the Lowy Interpreter.