One of the most powerful cyclones on record slammed into Australia's coast, threatening tourist cities with powerful winds and raising the danger of deadly storm surges.

Cyclone Yasi, packing winds of up to 300 km (186 miles) an hour near its core, come ashore along hundreds of kilometres of northeast coastline late on Wednesday.

Mines, rail lines and coal ports have been shut, with officials warning the storm could drive inland, hitting mining areas of Queensland state struggling to recover from devastating floods. Queensland accounts for about a fifth of Australia's economy and 90 per cent of its steelmaking coal exports.

Shortly after midnight, a Bureau of Meteorology spokesman told television the eye of the cyclone was crossing the coast close to the tourist town of Mission Beach.

'We are going to see about three to four hours of very destructive winds as it crosses the coast,' the spokesman, Rick Threlfall told ABC Television.

State Premier Anna Bligh said the force of the cyclone was unprecedented.

'I am not going to sugar-coat this. It's going to be a tough 24 hours ... We are still in for the worst,' Bligh told a briefing.

'Without doubt, we are set to encounter scenes of devastation and heartbreak on an unprecedented scale. This cyclone is like nothing else we've dealt with before as a nation,' she said earlier.

Yasi is a maximum-strength category five storm and has drawn comparisons with Hurricane Katrina which wrecked New Orleans in 2005.

'This is the scariest thing ever,' a caller who identified himself as Craig told a Queensland radio.

'I can hear (roof) sheeting lifting. I went through Cyclone Larry (in 2006) in the same house, and it was nothing like this. Mate, it's huge, it's massive.'

Engineers warned that Yasi could even blow apart 'cyclone proof' homes when its centre moved overland, despite building standards designed to protect homes from a growing number of giant storms.

Authorities said 150,000 homes were without power.

The storm threatens to inflate world sugar, copper and coal prices, forcing a copper refinery to close and paralysing sugar and coal exports. It even prompted a major mining community at Mt Isa, almost 1,000 km (620 miles) inland, to go on alert.

Global miners BHP Billiton and Peabody Energy have shut several coal mines in Queensland ahead of the cyclone, an official for the union representing Queensland coal miners told Reuters.

Bligh said the cyclone could batter the state for up to three days as it moved inland and slowly weakened. She said 61,000 homes had lost electricity.

She said a giant nine-metre (30-foot) wave had been recorded off the coast, highlighting what is likely to be the greatest threat to life: surges of water metres above normal high tide levels in the worst-affected coastal areas.

Selwyn Hughes, turned away from a shopping centre taken over as a shelter late on Wednesday, stood with his family outside in the car park and said his only comfort was in numbers.

'There are so many of us here. Surely they have to do something, find somewhere safer to move us to before it arrives,' he said, squatting on a pink suitcase with his five children, aged two to 13.

More than 400,000 people live in the cyclone's path, including the cities of Cairns, Townsville and Mackay. The entire stretch is popular with tourists, includes the Great Barrier Reef, and is home to major coal and sugar ports.

In Townsville alone, the storm surge could flood up to 30,000 homes, according to the town's web site. The tourist hub of Cairns also expects its centre to be flooded.

The military is helping evacuate nearly 40,000 people from low-lying coastal areas, and from the two hospitals in Cairns.

Satellite images showed Yasi as a massive storm system covering an area bigger than Italy. It is predicted to be the strongest ever to hit Australia.

Prime Minister Julia Gillard has put 4,000 soldiers based in the garrison town of Townsville on standby to help once the cyclone passes, as well as military ships and helicopters.

The centre of the cyclone was expected to make landfall between Cairns and Townsville.

In Cairns, main streets were deserted. Shops were closed and windows taped to stop glass from shattering.

'We're hoping for the best, but expecting the worst to be honest,' Scott Warren said as he covered windows with black plastic sheeting at a coffee shop on the Cairns waterfront.

Bligh warned that the mobile phone network may go down and said estimates were that 150,000-200,000 people could lose power if winds topple transmission towers.

At Cairns airport, people queued from dawn to catch the last flights out before the terminal was locked down and sandbagged against storm surges.

Queensland has had a cruel summer, with floods sweeping across it and other eastern states in recent months, killing 35 people. The state is also home to most of Australia's sugar industry and losses for the industry from Yasi could exceed A$500 million, including crop losses and damage to farming infrastructure, industry group Queensland Canegrowers said.-Reuters