Cardwell businessman Greg Smith said he and his son watched the lights for 15 minutes and are convinced that what they saw was some sort of UFO.

" I used to be the world's biggest sceptic about this stuff, but I'll tell you what, this really rattled me and my son,'' he told The Townsville Bulletin.

Mr Smith said they watched the lights from the front of the Lyndoch Motelon the highway towards the northern end of the town.

``There were two large orange lights. There was no beam and no noise. It was absolutely silent and they were moving slowly across the sky towards the north-west. We couldn't tell if the lights were from one or two machines. At first we thought they were over buildings between the highway and the beach, but other people said they were just out over the water,'' he said.

Mr Smith said he thought it must have been one or two helicopters, but discounted the possibility due to the fact there was no noise.

Another Cardwell resident, Phil Mulley and his wife Helen saw the lights on two consecutive nights.

"We thought it was a chopper coming up the channel. We watched it for a few minutes and then it disappeared in cloud. The next night my sister rang me and said to look outside. I went and looked and there were two lights. We watched them for a while until they disappeared in cloud,'' he said.

Mr Mulley said he knew of at least six or seven people who saw the lights.

President of UFO Research Queensland Sheryl Gottschall said she could not say what the lights were, but added she had no qualms in saying there were extraterrestrials which visited earth from time to time.

"I've been with this organisation for 25 years and in that time I've spoken to 3000 people who have seen strange lights and objects and to another 600 to 700 who have had close encounters,'' she said.