Cuba has already suffered $5 billion in damage from two hurricanes this year [EPA]

The US National Hurricane Centre said on Saturday that the storm's maximum sustained winds have increased to 135mph.

The storm was expected to "pass over or near Little Cayman and Cayman Brac during the next few hours ... and be approaching the coast of central Cuba late tonight or early Sunday," it said.

Residents of the British territory shuttered their homes while some visitors sought to evacuate the islands from waves forecasted up to nine metres high, which would cause dangerous coastal storm surges.

Hurricane Katrina was a Category Three storm when it came ashore near New Orleans in 2005 and swamped the low-lying US city, causing hundreds of deaths.

The Cayman Islands, however, are considered less vulnerable to the tropical storms, with structures built to withstand fierce winds and rain.

Michael Brennan, a meteorologist from the US National Hurricane Centre, said Paloma could pose an extreme danger.

"There is potential for a storm surge of three to four metres above normal tide levels, near to the east of where Paloma's is expected to make landfall in the south coast of Cuba," he said.

"Additionally, there's the potential of five to ten inches of rainfall and that could produce flash floods and mudslides, but some of the biggest potential for damage comes from the storm surge, which could be very large."

Cuba evacuation

Paloma was expected to hit Cuba on Saturday, possibly gaining more strength on the way.

Cuba has already suffered $5bn in damage from two hurricanes this year.

Officials said they had evacuated at least 85,000 boarding school students on Friday and would soon begin moving people from flood-prone areas.

As it formed on Thursday, Paloma poured heavy rains on Honduras. The UN estimates 70,000 people have been made homeless there by recent storms.

The hurricane season typically extends from June through the end of November in the Atlantic and Caribbean.

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