A SMALL Territory community is still reeling with shock after four UFOs descended on their Outback homes.

Families spent hours in fear as what appeared to be three spaceships hovered in the distance with another just metres above their houses.

The drama at Marlinja, population 112 and 730km south of Darwin, began at 8pm on Sunday.

Resident Janie Dixon said it started as an "ordinary" night.

"The kids were on the basketball courts, shooting a few hoops, and I was indoors talking to my two nieces when we heard a strange, loud noise," she said.

"We ran outside but at first we couldn't see anything -- it was really dark and we could hear the sound.

"The sound was horrible. It sounded like something was going past.

"We thought it was a jet. I saw what I thought at first was the evening star, the first star you usually see at night.

"But then we saw three red lights in the distance, and the sound kept getting louder.

"The ground felt like it was shaking, so we ran inside and shut the doors.

"My nephew and niece were looking out through curtains. The thing came closer, circled around the basketball courts and then came so close above our house.

"The kids at the basketball courts ran -- two girls stood there looking towards the sky.

"They tried to see what it was but all they could see was this bright red light in the pitch black."

Ms Dixon said the UFO hovered above the homes for what seemed like a couple of hours.

She said at one stage the phone rang, but went dead when she tried to answer it.

"Then the light in the house became so bright, it was like we were sitting in a football stadium," she said.

"After a while, after the things all disappeared... I think it was about 11pm by then.

"We went outside and were just sitting around drinking tea and talking about it all. The kids were put to bed.

"We heard the noise again and it came back, but disappeared again moments later.

"We were all really frightened.

"It was a big shock and I couldn't sleep."