Cyclone Marcia bears down on Australia

This infrared imagery from NASA shows the severity of tropical Cyclone Marcia as it tears towards the Queensland coast on Friday

Parts of homes on an island off the coast of central Queensland have started breaking off into the ocean and another 10,000 across the state are without power as the full force of Cyclone Marcia sets in.

Dramatic pictures show the ground eroding away on Great Keppel Island, just east of Queensland's coast, causing three entire homes to collapse as the barricades holding up the structures are swept away.

Winds of up to 200km per hour tore roofs and doors off buildings in the coastal town of Yeppoon as the storm continues to tear down the coast.

At least 10,000 homes in Yeppoon have lost power, and while the Bureau of Meteorology downgraded the cyclone's category, they warned of 'very destructive winds still expected near the centre'.

But as of 5pm on Friday, the weather bureau downgraded Cyclone Marcia to a category 2 system and expected to turn to the south-southeast. It will weaken below cyclone strength on Saturday morning.

Queensland Premier Annastacia Palaszczuk warned the damage could be extremely destructive as she said residents would experience a very 'harrowing and terrifying' couple of hours.

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'My main message is Yeppoon must go into lockdown. (There will be) serious, strong, destructive winds. The noise will be extreme,' she said on Friday morning.

'Please do not leave your homes this morning. Go to the strongest part of your house, which is usually the bathrrom area. Take clothes and mattresses. Make sure your children are safe. Your safety now is paramount.

'Over the next few hours, many Queenslanders are going to go through a harrowing and terrifying experience. We will be standing by your side. This is a severe cyclone, I want everyone to take all the precautions.'

Cyclone Marcia crossed the coastline near Shoalwater Bay, 100km north of Yeppoon, according to the Bureau of Meteorology.

It then moved south at 20km per hour towards Yeppoon and Rockhampton.

The storm was downgraded to category 3 as it crossed over Rockhampton on Friday afternoon and by 5pm Friday, it was downgraded to a category 2 system.

Queensland Premier Annastacia Palaszczuk warned the damage could be extremely destructive in Yeppoon (pictured) as she said residents would experience a very 'harrowing and terrifying' couple of hours

The storm surge was forecast to be three metres above high tide, which increased the risk of flooding.

'We have heard reports there are people still driving around on the roads in these communities. You are putting your lives and others at risk. This is a serious situation,' she said.

Police Commissioner Ian Stewart said a disaster was looming for parts of Queensland and even emergency services would be withdrawing from the cyclone's strike zone.

'This is going to be a calamity, there is no doubt about that,' he said.

'They will be going to places of safety, so that they are ready as soon as the eye has passed. As soon as the danger has passed, they can get out and assist member of the public.'

The Darwin Showgrounds fill up with the entire population of the remote community of Warruwi following warnings Cyclone Lam would make landfall at 4 or 5am on Friday

Rockhampton, south of Yeppoon, is also in the firing line with Marcia still expected to be a strong category three cyclone when it hits there, after tracking south over land.

It comes as two fisherman, who went missing in the Cyclone Marcia warning zone after their boat had sunk, were found early on Friday morning.

The two men, believed to be aged 38 and 39, went missing on Thursday afternoon en route to the island.

A break in the weather whipped up by category five Marcia allowed a chopper to go up on Friday morning to resume the search for the missing men and they were found safe and well at the northern end of Moon Boom Island.

Police said men sent a text message to their family saying their boat had sunk. The men, from Brisbane and Maryborough, were on a camping and fishing trip at the time they went missing.

Waves crashed into a breakwall at Yeppoon after Cyclone Marcia made landfall on Friday morning

Several Category Four and Five cyclones have devastated Australia in the past, including Cyclone Tracy which struck Darwin in 1974, Cyclone Larry which crossed the Queensland north coast in 2006 and Cyclone Yasi which also hit Queensland in 2011.

A category 5 storm is the highest intensity scale of a tropical cyclone, with maximum wind speed averaging more than 200km/h and the strongest gust estimated to be more than 279km/h.

The weather bureau describes the category as 'extremely dangerous with widespread destruction'.

A second cyclone, Lam, lashed the Northern Territory early from 3am on Friday but is losing strength as it moves in land.

Cyclone Lam is forecast to track towards the remote Top End town of Bulman after already impacting three isolated Northern Territory communities.

The category four storm crossed the coast between Milingimbi and Elcho Island around 2am (CST).

The Bureau of Meteorology says areas affected are Goulburn Island to Port Roper, including Nhulunbuy, Groote Eylandt and adjacent inland areas to Bulman.

Rough seas from Cyclone Marcia hit as far down as the Gold Coast on Friday morning

Residents at Galiwinku - home to about 3,000 people, of which about 400 are protected in two main shelters - lost power and water earlier on Thursday.

More than 400 residents of Goulburn Island, one of the most remote places in Australia, were moved to safety in Darwin earlier on Thursday.

Located off the north coast of the Top End, all residents of its Warruwi community were evacuated.

Police said 1,000 people are thought to be impacted in the communities, and that the remoteness of the region meant authorities were not yet able assess damage in the area.

As of 8am, Lam has been downgraded to a category three, from four, after impacting Galiwinku and Milingimbi as well as Ramingining, almost 600km east of Darwin.

The people of Ramingining were already out and about checking on cyclone damage to their homes despite warnings that Cyclone Lam was not over yet. No one has so far been reported injured in the remote Northern Territory community, with the only recorded fatality being a dog.

Queensland Premier Annastacia Palaszczuk held a meeting of the Disaster Management Committee at the Emergency Operations Centre in Brisbane's north on Thursday afternoon where she and several of her new ministers were briefed by emergency authorities.

'It is important all Queenslanders brace themselves for heavy rain,' she said at the time.

The premier said the meeting's key point stressed that the safety of Queenslanders was the priority.

'Queenslanders need to be prepared now,' she said. 'This is an important time now not to panic but to make sure you have your preparations in place.'

Cyclone Marcia (pictured right), packing winds of 300km per hour, is expected to cause catastrophic damage to Yeppoon in central Queensland on Friday morning. A second cyclone, Lam (top left), was lashing the Northern Territory from 3am on Friday morning

The bureau has been warning of dangerous surf, abnormally high tides and heavy rainfall from central Queensland to the southeast coast.

Ms Palaszczuk said cyclone centres were open in Yeppoon, Proserpine and Mackay and all airports in the area had closed.

The bureau has been issuing hourly updates on the cyclone and Ms Palaszczuk said it was vital residents stayed close to a radio.

SEQ Water has advised the Wappa Dam, just inland from the Sunshine Coast, is completely full, meaning forecasted rainfall will significantly swell the Maroochy River.

Ms Palaszczuk's message to the entire state was simple: 'start getting ready now'.

On Thursday, Queensland State Emergency Services had handed out well over 7,000 sandbags to help shore up homes and storefronts and advised residents to seek higher ground to ride out the storm.

Marcia intensified quicker than expected, strengthening from a tropical low in the Coral Sea into a cyclone by Wednesday evening, according to meteorologists.

Coastal towns were already feeling the brunt of rising seas, with destructive waves and the highest tides of the year expected to cause widespread coastal flooding with many beaches were closed.

'The seas will be big, the swells will be big, the winds will be strong, and the rain will be very, very heavy,' Maritime Safety Queensland spokesman Patrick Quirk said on Thursday.

'You'd be a very brave or foolish seafarer who went to sea in these conditions unless it was an urgent or lifesaving issue.'

Shipping and aluminium smelting in the path of the cyclones could face disruptions but farmers suffering under severe drought will welcome the soaking rains.