Brazilian journalist Alexandre Tortoriello saw Smith being taken through Rio's airport. "The operation was planned in secret," he told Radio New Zealand.
"They've taken him from prison and then taken him to the airport where he was conducted through restricted areas. No one from the public could see him. I could see the Brazilian federal agents and someone from the New Zealand Government."
Mr Tortoriello said he saw Smith's luggage being checked in by the Brazilian officers and the New Zealand official.
Smith is understood to have boarded a plane to Santiago, Chile, where he will join a connecting flight to Auckland. He is expected to land in New Zealand at 4am tomorrow.Smith's flight left Brazil at 3.21pm Brazil time (6.21am NZT), bound for Santiago, Mr Tortoriello said.
"He will be changing planes in Santiago and will be arriving tomorrow at 4am at Auckland Airport."
The Brazilian Government had yet to confirm Smith's deportation, the journalist said.
"The federal police in Brazil, it's like the American FBI but it's in charge of our borders, so basically they can deport someone who is illegally in the country," he explained to Radio New Zealand.
"The judge said yesterday, 'I can't understand why it's taking so long, they could have done it the day he was arrested or on the following day'. They had everything prepared, the Interpol branch here in Rio, they were even prepared to send their own police escort if New Zealand weren't prepared to send escorts to have Smith back to New Zealand."
Smith's lawyer Tony Ellis said his deportation had taken him by surprise as his client had filed a writ in Brazil earlier this week to delay proceedings.
"I'm surprised he's on his way back today if he's filed a writ of habeas corpus. I'm not surprised that he's been deported, I was somewhat surprised he hadn't been deported," he told Radio New Zealand.
"I do have some concerns that, if he says he's filed a writ of habeas corpus and he's on a plane, that doesn't sound right."
Police have confirmed Smith has been deported from the South American country and is en route to New Zealand.
The convicted murderer was being escorted by three New Zealand police officers who will be with him for the duration of the journey, police said.
"Smith and his police escorts departed Rio de Janeiro earlier this morning after completion of the formalities required to effect his deportation," police said in a statement.
"This follows the decision from the Brazil Federal Court last week ordering deportation within 10 days.
Smith fled to Chile and then to Brazil earlier this month while temporary release from Spring Hill prison using a passport issued in his birth name Philip Traynor.
He was caught hiding out in a Rio hostel and taken into custody.
His escape prompted a scathing report from Corrections, released this week.
Smith was caught in Rio de Janeiro on November 13 a week after fleeing New Zealand while on temporary release from Spring Hill Corrections Facility in South Auckland. He was serving a life sentence for murder and other violent crimes.
Smith had arrived in Rio de Janeiro with a large suitcase and a backpack, checked into a youth hostel as James Paul Andrews from Brisbane and joked about finding himself a Brazilian girlfriend.
He had paid $40 for two nights in a bottom bunk in a six-person dorm called the Ipanema room at the Cidade Maravilhosa, and for all intents and purposes was just another tourist in Rio de Janeiro.
But the next morning, a staff member recognised him in a television news report about his escape. When he left to buy food, the employee decided to call the police.
Officers swooped and the international manhunt for Smith was over.
Smith was remanded in custody to the notorious Ary Franco Prison, he was jailed under the name Phillip John Traynor, the name on the passport he travelled to Brazil on.
He was transferred from Ary Franco to the Bandeira Stampa public jail, part of the Gericinó Penitentiary Complex in Bangu in Rio's Western Zone.
No reason was given for the transfer, other than it is a "unit in accordance with his profile".
When he was sentenced to 60 days preventative detention on 12 November, the judge Flavio Roberto de Souza said: "It must be born in mind that, given the deportation request, that he could escape to an unknown location, as he did during his prison sentence in his country of origin."
Smith is facing one charge of escaping from custody, and further charges are likely when he returns.
It was not clear whether anyone will be charged with assisting in his escape. His sister Joanne Smith, one of his release sponsors, picked him up from the jail. Police had raided her Palmerston North home seizing a laptop and other items.
The man who was molested by Smith as a child and who saw his father being murdered by Smith said he could now carry on with his life "without having that fear [of Smith finding him] over my shoulders".
Earlier this week the Government confirmed the terms of reference for an independent inquiry into Smith's escape.
State Services Minister Paula Bennett said the inquiry would look into three aspects of Smith's escape while on a three-day release from Spring Hill Prison.
The draft terms of reference focused on Smith's temporary release from prison and departure to South America, his use of multiple identities to evade authorities, and the adequacy of information sharing between Government agencies.
Mrs Bennett said: "It is imperative the inquiry provide answers to the many questions New Zealanders have around how Mr Smith/Traynor was able to abscond overseas while on temporary release from prison."
Smith escaped New Zealand by renewing a passport in his birth name Traynor and using it flee to Chile and Brazil while on temporary release.
The inquiry would be chaired by QC John Priestley, who Mrs Bennett said had "significant knowledge of the justice and public service systems".
Mr Priestley would be assisted by high-ranking public servant Simon Murdoch, who has previously served as head of the Department of Prime Minister and Cabinet.
Mrs Bennett said the inquiry would report back in the second half of next year.
The inquiry was separate from an internal Department of Corrections inquiry and a multi-agency inquiry led by the Ministry of Justice.
By Patrice Dougan of NZME. News Service
