There appear to be several versions of this song -

1) the original version by The Containers
2) a version by James A. Smith's other band, the Beach Bullies
3) a studio version recorded by early (pre-Soft Boys) Robyn collaborators Maureen and the Meatpackers, slated for release on Armageddon records but only produced in a handful of test copies (Armageddon promo single)
4) a Soft Boys studio version, recorded at Alaska Studios with Rosalind and Anst (ex-Meatpackers) on guest vocals (see below) and featured in the first episode of the Music View radio show, and
5) A live version from Maxwell's in 1980 during the Soft Boys' first (brief) US tour. This was included on a 7" with the 2001 re-release of Underwater Moonlight (Innocent Boy b/w Zip Zip and Astronomy Domine) and was reportedly a B side on something else in the 80s.

From James A. Smith:
"The song was written by me, and originally recorded by my band of 1978-80, the Containers, at Spaceward Studios. The lineup was Myself on Guitar and vocals, Adrian Foster bass,(Also bass player with Cambridge pub/party favourites 'The Ducks On The Wall Gang' named after a strip cartoon I once drew), Stella Barker on rhythm guitar (she later played with The Bodysnatchers, a ska band, and The Belle Starrs, who had several hits in the early eighties), with Robyn on lead guitar for a couple of numbers (not Zip Zip) and Morris Windsor on drums.

The version you may have heard was recorded at Alaska Studios, Waterloo, London SE1 as part of the Underwater Moonlight sessions, or shortly afterwards. The Soft Boys had played Zip Zip as an encore a couple of times in the States - I think there is a bootleg from a show in NJ - must have been 1980? The Alaska version was the Soft Boys, with Rosalind Kunath and probably Anstis Fisher on vocals with Robyn."

From the notes on the video posted on YouTube in 2013 (linked above):

The Containers existed in London from the winter of 1978 until January 1980. Founder members James A Smith, Adrian 'Hots' Foster, and Stella Barker had all been in Smith's band The Inserts (1977), and were part of the Cambridge generation of musicians that gave the world The Soft Boys, The Users, and The Waves.

One day in the early spring of 1979, with the assistance of Robyn Hitchcock and Morris Windsor of the Soft Boys, the Containers recorded five demos in the legendary Spaceward Studios, the session engineered by Mike Kemp.

Stella left soon afterwards for pop stardom in the Bodysnatchers and The Belle Starrs, Smith released the minimalist album 'We Rule The Universe' by the Beach Bullies in the summer of 1980, and the demos languished in a box until this year...