Cyclone Yasi, a category five storm, the most severe level, is expected to make landfall shortly.
It will hit between Innisfail and Cairns, where trees are swaying and power cuts have been reported.
Queensland residents have been told it is now too late to escape and that they should take shelter.
"The time for movement and evacuation has now passed," State Premier Anna Bligh said, adding that Yasi would be "the most catastrophic storm to ever hit our coast".
"People should be sheltering wherever they are."
Prime Minister Julia Gillard described the storm as a "cyclone of savagery and intensity".
"People are facing some really dreadful hours in front of them," she said.
The state disaster co-ordinator warned residents they would be on their own for up to 24 hours when Yasi strikes.
This image provided by Nasa shows Cyclone Yasi as it approaches Queensland |
Many fear this could be worse than Cyclone Tracy, which hit Darwin on Christmas Eve in 1974 and killed 71 people.
That was a category four storm.
The cyclone follows the worst floods in the state's history, triggered by tropical storms which have battered the region since the end of November.
'Life-threatening'Cyclone Yasi is expected to make landfall between the northern city of Cairns - home to some 164,000 people, and popular with tourists - and the rural community of Innisfail, some 100km (60 miles) south.
The eye of the storm alone was reported to be 35km (22 miles) in width, with a front stretching across 650km (400 miles).
Storm surges are expected to cause widespread flooding and wind gusts are likely to rip off roofs and cause significant structural damage.
High winds and driving rain are already battering coastal towns and cities. In Innisfail, a roof has already been ripped from a building.
The Bureau of Meteorology has warned that Cyclone Yasi posed an "extremely serious threat to life and property" within the warning area, especially between Cairns and Townsville.
"This impact is likely to be more life-threatening than any experienced during recent generations," it warned.
More than 10,000 people are in evacuation centres, and there were reports that those who had not already secured a place were being turned away.
Those remaining in their homes were told to tape up windows, fill sandbags and prepare a "safe room" with mattresses, pillows, a radio, food and water supplies to wait out the cyclone.
They were also encouraged to fill their bathtubs with water for drinking supplies.
'The worse thing is the waiting'
State disaster co-ordinator Ian Stewart said it would be more dangerous for people to panic and leave their properties than to stay put once the storm strikes.
"[People] should be preparing themselves for the fact that the roofs of their houses may lift off but that does not make the structure of the house any less sound," he said.
Earlier, police had walked through the streets of Cairns and the northern capital of Townsville, urging people to leave the cities if they could.
Residents frantically bought up food and fuel supplies to last through what they have been told will be a storm of unprecedented ferocity.
Thousands of people have already fled their homes close to the coast and the army has flown hospital patients in the northern city of Cairns to Brisbane, which is further south.
More than 400,000 people live in the cyclone's expected path. The area, which includes the Great Barrier Reef, is also popular with tourists.
Cairns resident Philip Baker told the BBC it seemed "a safer bet" to stay in his home rather than flee or head to an overcrowded evacuation centre with his wife and young daughter.
"We're as prepared as we can be. There is little left to do but wait.
"The authorities have been wonderful, supplying us with updates and the latest information via text. We've been told that we might lose power and the phone lines in the next few hours.
"The windows have been taped and if the situation rapidly deteriorates we plan to bunker down in a windowless room when the storm hits - there's just enough room to fit a single blow-up mattress on the floor. We're reasonably high up, so hopefully should be okay."
Cairns airport closed on Wednesday. Rail lines, mines and coal ports have also shut down.
Source: BBC
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