More than 80 dead and sick greater crested terns have been found at an island called Baudin Rock in South Australia.
SA's chief vet Skye Freuan said it was likely the first mass mortality event from the deadly disease following its discovery in Western Australia in June.
"We've known that this is going to happen at some point in time," she told reporters on Saturday.
"Unfortunately, it does appear to be escalating quite rapidly."
An aerial surveillance team on Friday collected some of the dead birds for testing from the island about eight kilometres from Robe, south of Adelaide.
The birds are not considered suspected or confirmed cases and are undergoing testing for H5 bird flu in Adelaide.
Dr Freuan said there were probably more sick crested terns at the island than reported and she expected more would die.
"What we're seeing is that this virus is now spreading through our local resident birds - crested terns and seagulls," she said.
"We can't stop the spread once it gets into wildlife; at some point in time, we were likely to see large numbers of sick or dead animals."
There have been 53 confirmed cases of H5 bird flu in Australia so far, 39 of which are in SA.
The total number of presumed positive cases soared late on Friday when 19 greater crested terns from several locations along SA's southeast coast and Kangaroo Island were confirmed for bird flu.
A silver gull found at Robe in SA was confirmed as a H5 case on Saturday.
It's the first seagull to be confirmed with the disease, according to Australia's Chief Veterinary Officer Beth Cookson.
A further six suspected cases have been detected, including three in seagulls and three in greater crested terns.
One of the greater crested terns was found inland near Monarto.
Dr Freuan said it was concerning.
"It's obviously in an area where we have production birds as well, as well as our zoo, so we've been talking to all those stakeholders," she said.
"They're well informed and well prepared."
Burnet Institute chief health officer Suman Majumdar said the fresh case was significant.
"Gulls move between beaches, wetlands, farmland and urban areas, which could carry the virus into a much wider range of wildlife, poultry and environments," he told AAP.
Associate Professor Majumdar said overseas experience suggested Australia should expect further spread along coastlines, mass mortality events in seabird colonies and marine mammals, and rising detections in the weeks ahead.
"What we are seeing now is the early part of that curve," he said.
Australians have previously been warned to brace for mass deaths in seabird colonies and marine mammals, as the deadly virus spreads.
The federal government had invested $113 million to prepare for the arrival of the flu in Australia, and released a further $24 million to states and territories in July.
There have been no detections in poultry or in Australia's agricultural production system.
The risk to human health remains low.
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