This paper aims to investigate the tunnelling stability of underwater slurry pressure balance (SPB) shields and the formation and evolution mechanisms of ground collapse following face instability. A laboratory SPB shield machine was employed to simulate the entire tunnelling process. Multi-faceted monitoring revealed the responses of soil pressure, pore water pressure, and surface subsidence during both stable and unstable phases. The morphological evolution characteristics of surface collapse pits were analyzed using three-dimensional scanning technology. The experimental results indicate that: (1) The key to stable tunnelling is balancing the pressure in the slurry chamber with the tunnelling speed, which ensures the formation of a filter cake in front of the cutterhead. (2) The torque of the cutterhead, soil pressure, and surface subsidence respond significantly and synchronously when the tunnel face becomes unstable, while the soil and water pressures are relatively less noticeable. (3) Excavation disturbance results in a gentler angle of repose and a wider range of collapse in the longitudinal direction of the collapsed pit. (4) A formula for predicting the duration of collapse is proposed, which effectively integrates the evolution patterns of the collapse pit and has been well-validated through comparison with the experimental results. This study provides a reference for the safe construction of tunnel engineering in saturated sand.