Australian Prime Minister Julia Gillard on Thursday urged far north Queenslanders not to let their guard down in the wake of Cyclone Yasi, saying the storm is still dangerous.

Queensland endured a night of terror as Cyclone Yasi, the category five storm, struck early on Thursday morning 1 a.m. (AEST) , delivering 290km/h winds and raging seas. More than 170,000 properties are without power across north Queensland.

Gillard said while the worst of Yasi appears to be over, some areas are expected to be hit by a second, dangerous storm surge on Thursday.

She warned people to stay alert and listen to the advice of emergency services workers.

"Surging tides, powerlines that are down, flooding danger and there are some parts of Queensland that are bracing for the cyclone to come across land and to still hit," she told reporters in Canberra on Thursday.

"People cannot let their guard down yet. The danger is not over. "

Gillard said emergency payments of 1,000 U.S. dollars per adult and 400 U.S. dollars per child would be available to people directly affected by the cyclone. She added that the Defense Force stood ready to provide whatever help was needed. Generator capacity would also be provided to overcome power outages.

Gillard insisted the nation would recover, although there is going to be a lot of damage and rebuilding to do.

"I want to say to the people of Queensland and the people of the nation generally, we will rebuild," she said.

"We will rebuild from the floods, we will rebuild from the cyclone, we will rebuild from anything that nature throws at us."

The prime minister said it was too early to estimate the cost of the cyclone or say when she would visit north Queensland.