But forecasters are still warning of heavy rain and squalls, with the storm expected to cross the coast south of Dundee Beach, about 130km southwest of Darwin, before moving southeast on Boxing Day and Monday.
A severe weather warning was issued early on Christmas morning for parts of the Northern Territory's Arnhem district.
Forecasters said a monsoon was likely to strengthen across the northern Top End during Saturday as a tropical low deepened near the Tiwi Islands.
Late on Saturday evening the Bureau of Meteorology said the low was no longer expected to reach tropical cyclone intensity as it crossed the coast, but that such an outcome remains "highly plausible" before the storm moves across northern Queensland.
"This system is bringing a lot of moisture to the Top End," Shenagh Gamble from the BoM said on Saturday.
"Regardless of whether or not it develops into a tropical cyclone, and if it decreases in strength as it crosses the coast, it will still bring heavy rainfall across the Top End over the coming days."
The system has already brought widespread rain, including a downpour of almost 160mm at Maningrida Airport, some 500km east of Darwin.
Higher than normal tides are expected for the Tiwi Islands, and between Point Stuart and Darwin.
Northern Territory Emergency Service advises people to secure loose outside objects and seek shelter if conditions deteriorate.
Motorists should pull over if it is raining heavily and avoid driving into water of unknown depth and current.
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