In response to a video posted on social media on Saturday of security officials instructing fans to remove shirts with the slogan on them, the governing body said the Melbourne Park tournament does not allow political statements.
Martina Navratilova described that reaction as "cowardly" and said Australian Open organisers were giving in to China and placing sponsorship money ahead of human rights concerns.
"Unfortunately I think there's a lot of miscommunication and lack of understanding on it, because it's not just a one line response," Tiley told Reuters by telephone.
"Someone wearing a T-shirt saying something is not going to have any impact on the safety. But when they start getting together as a group, as a mob, and start being disruptive, in any way or form, that's a different thing.
"If they're coming in to do what everyone else is doing -- to enjoy the tennis -- and if they've got a T-shirt on that says, 'Where is Peng Shuai?', that's fine."
Peng's situation became a matter of concern in November when the former women's number one doubles player alleged that a former Chinese vice premier, Zhang Gaoli, had sexually assaulted her in the past. After that post, she was absent from public view for nearly three weeks.
Last month Peng said she had never accused anyone of sexually assaulting her, and that a social media post she had made had been misunderstood.
Zhang has not commented on the matter.
Referring to the Peng shirts at Melbourne Park, a Chinese foreign ministry spokesman said on Monday that "such behaviour is unpopular and will not succeed".
Tiley said the steps taken by security staff last weekend was based on suspicions over "the motive and intent of the person coming in".
"If they are coming on site to specifically disrupt the comfort and the safety of our fans, then we don't welcome them," Tiley said.
"It doesn't really matter what they say but if they're bringing a banner on site that's got poles that they're going to put up and they're going to cover people's ability to watch the tennis, then they're going to need to remove it.
"If they continue to be persistent, they will be removed from the site but if someone wants to wear a T-shirt, supporting Peng Shuai and that's fine or doing other things, that's fine."
On Monday, Peng supporters in Australia said they were planning to hand out 1,000 'Where is Peng Shuai?' T-shirts at Melbourne Park this week after raising more than A$10,000 on a GoFundMe page.
The Women's Tennis Association has suspended tournaments in China due to its concerns over Peng's safety and Tiley said Tennis Australia backed their stance.
"Right at the beginning when Peng Shuai's whereabouts was not known we worked closely with the WTA to utilise our resources in the region, to support the WTA," he said.
"We were concerned about Peng Shuai's well-being from the beginning and wanted to make sure she was okay. Obviously since that time, she's now made some statements, but we also support the WTA's position on it."