Tropical Cyclone Esther is expected to make landfall at the Queensland-Northern Territory border on Monday afternoon.
The Bureau of Meteorology is tracking the category one system, which is just off the mainland.
The slow-moving system will head west into the Northern Territory once it makes landfall and becomes a rain-depression.
Gale force winds are affecting areas along the coastline of the Gulf of Carpenteria, with the winds expected to affect Port McArthur in the NT all the way through to Burketown on the Queensland side of the border.
Mornington Island is also affected.
In Queensland, people living between the border with the Northern Territory and Burketown, including Mornington and Sweers Islands and Doomadgee have been told to remain inside until the cyclone passes.
There is also a severe weather warning in place from Karumba to the north of Pormpuraaw.
An aerial view of the coastline along the Gulf of Carpentaria in East Arnhem, Australia. Source: The New York Times
Fears that the system could intensify into a category two system when it makes landfall were eased on Monday morning.
"The threat for widespread and prolonged heavy rainfall has eased, however brief bursts of heavy rain remain possible with thunderstorms," the bureau said.
Abnormally high tides are expected to develop about the south-western Gulf of Carpentaria coast over the next couple of days and could produce minor flooding in low-lying coastal areas.
The slow-moving system is expected to weaken as it moves toward the central Northern Territory before possibly affecting Western Australia later in the week.
