Residents in Darwin are facing a massive clean-up after it was lashed by Tropical Cyclone Marcus today.

Wind gusts of up to 130 km/h winds battered the city as the cyclone passed over, bringing down power lines and trees and ripping roofs from homes.

The eye of the Category 2 storm passed over the NT capital around midday, with conditions beginning to ease as it moved south-west.

It was downgraded to a Category 1 south of Dundee Beach about 4pm.

A cyclone warning from Cape Hotham to Dundee Beach, including Darwin, has been cancelled but areas from Dundee Beach to Mitchell Plateau remain affected.

Cyclone Marcus also prompted the rescue of two people from a sinking boat in waters off the capital city.

Northern Territory water police entered the water near Dinah Beach boat ramp when gale force wind conditions ripped two boats containing two people from their moorings.

One of the people is believed to be in their 60s and was suffering a respiratory problem at the time of the rescue, while concerns were also raised that one of the boats was taking on water in the wild conditions.

The rescue operation came as Tropical Cyclone Marcus crossed Darwin after intensifying to a Category 2 storm around 6.30am. 

The Bureau of Meteorology and emergency services crews are continuing to urge Darwin residents to stay indoors while downed power lines and trees are cleared.

Authorities also warned heavy rain and tidal surges could bring flooding to some areas.

Residents concerned about the safety of their homes were told that they should consider moving into one of the cyclone shelters opened around the city.

"If you're worried about your home being flooded or unsafe, those shelters are open today, but you need to head there now," Regional Controller Warren Jackson said.

Mr Jackson also urged businesses to close their doors.

"Government businesses are closed today. We're asking other businesses to consider the same measures," he said. 

"Employers should think about their duty of care to their staff when they consider whether to open today."

Destructive winds from the tropical cyclone caused power outages across Darwin, while public transport services and flights in and out of the capital city were all cancelled today due to the conditions.

Marcus is expected to weaken later this evening as it passes along the coastline. But it is forecast to strengthen tomorrow as it moves towards the northern Kimberly, bringing potential winds of up to 150km/h.

As Marcus approached yesterday, the AFL Northern Territory moved its grand final series in Darwin from Saturday to Sunday.

"A final call will be made, no later than 8am Sunday should the warning remain in place or the stadium be deemed unsafe or unfit to play on," the competition said in a statement.

The Palmerston Council election scheduled for Saturday has also been postponed to next weekend.

© Nine Digital Pty Ltd 2018