A curfew has been declared after a major earthquake hit New Zealand's second biggest city, Christchurch, bringing down power lines and bridges and wrecking roads and buildings.

"The damage is incredibly frightening. The only thing you can say it's a miracle that no one lost their life," Prime Minister John Key told Television NZ after the quake struck with a magnitude of 7.1 overnight.

He said early estimates for the cost of repairs were around NZ$2 billion.

A curfew has been placed on the central business district of Christchurch. Earlier, a formal civil defence state of emergency was imposed in the city of around 350,000 to coordinate recovery operations.

The last time authorities declared a local emergency was in late December 2007 when a 6.8 magnitude earthquake hit Gisborne on New Zealand's North Island. The earthquake caused damage to some buildings but caused no casualties.

Christchurch city and the neighbouring small towns bore the full force of the quake, which did considerable damage to infrastructure.

"The damage is immense, it's something that has affected every family, every household ... the hit on our infrastructure, the pipes that deliver the water, the waste water, the bridges, the power supplies has been very significant," Christchurch mayor Bob Parker told reporters.