Plans to evacuate up to 10,000 people in Australia's northeast from the path of a cyclone were put on hold Monday when the storm lost intensity and veered out to sea, officials said.

Severe Tropical Cyclone Hamish was bearing down on the popular Queensland tourist destination of Hervey Bay when it changed direction and moved away from the coast, state Premier Anna Bligh said.

But Bligh said the cyclone, which has been downgraded from category five to category four, still posed a threat to coastal communities.

"The news overnight is very welcome but I don't think any of us should see ourselves as out of danger yet," she told reporters.

"These are very unpredictable events ... we're hoping for the best today but still preparing for the worst."

The cyclone has menaced the Queensland coast since late last week, bringing heavy rains and strong winds but staying 120-200 kilometres (75-125 miles) offshore.

Several tourist islands, including UNESCO World Heritage site Fraser Island, were evacuated as a precaution over the weekend amid warnings the cyclone would spark a full-scale disaster if it made landfall.

Meteorologists on Monday put that prospect at less than five percent and predicted the cyclone would weaken to a category three storm by late in the day.

But cyclone warning centre forecaster Tony Auden said that residents along a 300-kilometre stretch of coastline still faced severe weather and needed to secure their property and boats.

"As the cyclone moves to the southeast, sea levels are expected to be elevated above the normal tide along the coastline and large waves may produce minor flooding along the foreshore," he said.

A large part of the Queensland coast was devastated by Cyclone Larry in 2006, which caused an estimated 500 million dollars (321 million US) in damage to crops and infrastructure.