Annette Churchill was having a cigarette on her back veranda when she and her children saw lights hovering in the sky.

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She said the circular object had about 12 lights on the outside and one big light in the middle as it spun like a spinning top over her and her neighbours' homes from about 7.30pm until about 10pm.

"The kids were scared. I wasn't scared,'' Mrs Churchill said.

"I said, `don't worry about it, kids. Let's just wait and see what happens'.'"

Waratah police did not receive any calls about the object.

The Bureau of Meteorology reported that an electrial storm hit the region with a southerly change at about 8pm with lightning high in the sky.

Mrs Churchill said the object she saw made a buzzing noise, but she didn't see the body of the object, only the lights.

"I've never seen a UFO before,'' she said.

"It would sort of hover over our place then it went over more to our neighbour's place and we lost sight of it, then it came back."

Her daughter tried to take photos, but it was too dark.