Typhoon Saola pounded Taiwan with fierce winds and torrential rain that left four people dead and forced nearly the entire island to shut down on Thursday, rescuers said.

Nearly 200 international and domestic flights were cancelled and authorities suspended trading on financial markets due to the extreme weather.

The slow-moving typhoon, which killed at least 23 people in the Philippines, made landfall near the eastern coastal city of Hualien at 3:20 am (1920 GMT Wednesday), according to the Central Weather Bureau.

Saola -- the first typhoon to hit the island this year -- triggered heavy rains especially in the north and east and touched off widespread mudslides, forcing the authorities to evacuate more than 1,500 people islandwide.

Television images from a police helicopter showed mudslides engulfing roads and farmland and threatening numerous households.

In the Sanhsia district in the north, one man was buried by mudslides and a police officer drowned while patrolling the area, the Central Emergency Operation Centre said.

The third death was recorded in south Taiwan's Chiayi county, where a motorcyclist died after he crashed into a toppled tree, it said.

The fourth one, not included in the centre's toll but reported in several local media, was a woman who was hit by a falling tree while distributing newspapers on motorcycle in southern Kaohsiung city.

Many residents across the island woke up to see their neighborhoods covered in ankle-deep water, with classes and work suspended everywhere except for Taidong county in the southeast.

The typhoon, packing winds of up to 155 kilometres (97 miles) an hour, left toppled trees covering streets and hampering traffic in several places in Taipei.

The centre of the typhoon moved back out to sea at about 7:00 am, the weather bureau said, adding it remained to be seen if it would make a second landfall later in the day.

"The typhoon is somewhat losing momentum, but it will keep bringing torrential rains in many parts of Taiwan today," an official from the bureau warned.

Rail traffic was interrupted while the high-speed railway linking Taipei to the southern city of Kaohsiung cut the number of trains to 97 from the scheduled 123.

About 30,000 households were without electricity for several hours, but by 9:30 am, power had been restored to all but 5,000 homes, the Central News Agency reported.

The weather bureau said the typhoon would continue to have an impact into the weekend, and that winds following in its wake could cause heavy rainfall in the island's south next week.

As of 0500 GMT, Saola was 30 kilometres (19 miles) east-northeast of Ilan, moving northwest at a speed of up to 18 kilometres (10 miles) an hour.