Updated weather advice pushes back the timing of the potential cyclone, which had earlier been tipped to form on Christmas eve.
Richard Wardle from the Bureau of Meteorology says the cyclone's expected to form around 3am or 4am (CST), but it may happen earlier than that.
Mr Wardle says the organisation of the storm improved overnight, giving forecasters a clearer picture of when it could become a cyclone.
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A cyclone watch continues for a vast expanse of land between Dundee Beach, southwest of Darwin, and Nhulunbuy, on the northeastern tip of Arnhem Land.

