Krathon, packing sustained wind speeds of 162 kilometres (100 miles) per hour and gusts of up to 198 kph -- was 120 kilometres southwest of the major port city Kaohsiung as of 3:00 pm (0700 GMT), the Central Weather Administration (CWA) said.
The typhoon, downgraded overnight to medium from strong under Taiwan's measurement system, is now expected to arrive near Kaohsiung or Tainan on Thursday morning, the agency said, a day later than previously forecast.
"This typhoon is moving very slowly. The time of its landfall continues to be delayed," said CWA chief Cheng Chia-ping.
Offices and schools across the island were closed and the interior ministry said around 10,000 people had been evacuated from vulnerable areas as a precaution.
Premier Cho Jung-tai urged the public to stay at home during the typhoon and remain vigilant.
"Krathon is moving very slowly, which also prolongs the time it may cause damage to Taiwan... It is necessary to strengthen vigilance in the south and the eastern areas affected by continuous rainfall."
All domestic flights and ferry services were cancelled Wednesday, and around 250 international flights were suspended.
Nearly 40,000 troops were on standby for relief efforts, the defence ministry said.
In eastern Hualien county, a 70-year-old man was rushed to hospital after he fell while trimming trees on Tuesday. He died in hospital on Wednesday and was listed as the first typhoon fatality, the National Fire Agency said.
Two people have been reported missing while 70 typhoon-related injuries were recorded as of Wednesday, it said.
Krathon also temporarily disrupted electricity in nearly 36,000 homes, authorities said. Typhoons are common around the region at this time of year.
However, a recent study showed that they are increasingly forming closer to coastlines, intensifying more rapidly and lasting longer over land due to climate change.
- Stranded tourists -
In Kaohsiung, the streets were nearly empty and trees were bending as heavy rain and strong winds lashed the port city.
Its airport was almost deserted, with staff putting up metal bars to brace the entrance gates in preparation for the typhoon and a handful of tourists trying to reschedule their flights.
"We came to the airport counter but unfortunately it's not in service... We have to stay at least two or three days longer," Malaysian tourist Chan Ka-woh told AFP after his flight home was cancelled.
Powerful waves pounded Kaohsiung's coast, with some seawater spilling onto the road near the scenic Sizihwan Bay.
Local authorities have distributed sandbags and cleared storm drains to avoid a repeat of the widespread flooding seen during typhoon Gaemi in July.
In neighbouring Taitung, local TV footage showed rivers swelling as torrential rain hit the county.
Gaemi was the strongest typhoon to make landfall in Taiwan in eight years, leaving at least 10 people dead and hundreds injured.
Taiwan is accustomed to frequent tropical storms from July to October, but experts say climate change has increased their intensity, leading to heavy rains, flash floods and strong gusts.
The storm was approaching Taiwan after slamming into a remote group of Philippine islands, where it cut power and communications and damaged "many" houses, according to a local mayor.
The Philippines' National Disaster Risk Reduction and Management Council said Wednesday that eight people were injured and one was missing due to Krathon.
It added that 5,431 people were displaced in the northern part of the Philippines, mostly from the regions of Ilocos and Cagayan Valley.
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