During the meeting about a dozen supporters of the Falun Gong spiritual movement held a silent protest outside Australia's department of foreign affairs, where Cui Tiankai, China's assistant foreign minister, was taking part in annual human rights talks between the two governments.
Part of the protest included the staging of a mock organ transplant. China has been accused of killing Falun Gong dissidents in detention centres so their organs can be used for transplants.
David Ritchie, the head of Australia's foreign affairs delegation, said Australia had raised the reports - supported by Canadian human rights campaigners – of organ harvesting.
"We certainly did raise those concerns and rumours and reports that we've seen," Ritchie told reporters at a joint media conference with Cui.
"We think the evidence is not necessarily there. It is still open, which is one of the reasons why we raised the issue. We don't know one way or another," he said.
Cui said there was no evidence to support the allegations.
"A number of foreign embassies in China, and a number of foreign correspondents in China, they did go to the site of the alleged story. And they found no evidence at all," he said.
China banned the Falun Gong spiritual movement in 1999 after about 10,000 people gathered outside the Chinese leadership's headquarters in Bejing to demand official recognition.
Falun Gong supporters and human rights advocates have continued to campaign from abroad against what they say is brutal persecution of the movement's followers by China.
Falun Gong says it has 70 million practitioners in China, hundreds of thousands of which have been illegally detained. Clearwisdom.net, a Falun Gong website says more than 100,000 of them have been sent to labour camps without trial.
During the talks, Ritchie said the Australian government would also look into Chinese requests for firmer action against Falun Gong supporters protesting outside the Chinese embassy in Canberra.
Over the past year, police in Australia have forced Falun Gong supporters to move their protest vigils from outside the Chinese embassy after complaints from Chinese diplomats that the protesters were too noisy.
Ritchie said he told Cui that Australia took its international obligations on maintaining the "dignity and protection" of foreign embassies seriously.
After Australia raised the issue of human rights, Cui questioned Australia's treatment of Aborigines, who remain Australia's most disadvantaged group. He asked why Canberra did not support a draft UN declaration on indigenous rights.
Australia has refused to endorse the declaration, which recognises the right of indigenous people to self-determination and recognises historic injustices as a result of colonisation and dispossession of land.
"We think there are some big problems with the text," Ritchie said
China is Australia's second-largest trading partner, with mineral exports to China more than doubling in the past two years.
Australia is looking for more deals to supply gas and uranium.
Australia has managed to balance its close ties with the United States with its policy of closer engagement with China and support for China's economic development.