The first day of the Kimberley Process Intersessional Meeting in Perth on May 1 was disrupted by the Chinese delegation which opposed the presence of the Taiwanese group.
Australia complained to China's ambassador to the country following the disruption, which was described by one attendee as "extraordinary".
China sees Taiwan as a breakaway province which will eventually be reunited with the mainland. It insists that other countries cannot have diplomatic relations with both China and Taiwan.
The Chinese group reportedly "hijacked the microphone" during a traditional Aboriginal welcoming ceremony, as a senior official was introducing Foreign Minister Julie Bishop.
The delegation wanted to know whether the Taiwan group - Rough Diamond Trading Entity of Chinese Taipei - had been officially invited.
"They were saying you can't even begin this meeting unless this matter is clarified," said the Australian attendee, the BBC and other outlets reported. "It was highly stressful for everyone in the room because they kept demanding to be heard. No country would accept showing such a lack of respect to its Aborigines and senior members of government."
The welcoming ceremony was suspended until the matter had been addressed. However, a discussion session later on the first day was also abandoned because of continual interruptions by officials from African countries in support of China's position. The Taiwanese delegation was asked to leave the conference.
A spokeswoman for Australia's Department of Foreign Affairs (DFAT) said the invitation of the Taipei-based group was consistent with Australia's One China policy.
"The chair had to withdraw the invitation to the Taiwanese following objections from China and several other delegations to the former's presence during the opening session, in order to enable the meeting to continue," she said.