The National Hurricane Center says Lili's top sustained winds have increased to near 135 miles an hour. Additional strengthening is possible by Thursday's forecast landfall in Louisiana.
The watch and warning area remains the same for now, with a hurricane warning between High Island, Texas, and the mouth of the Mississippi River. A tropical storm warning remains outside that area, from Freeport, Texas, on the west to the Alabama/Florida line on the east.
Lili is now moving northwest at about 15 miles an hour. That's expected to continue for the most part until landfall, when a more northern motion can be expected.
Some forecast models suggest Lili could be a Category Four hurricane at landfall, when it could then lurch northeast.
In Louisiana residents dug in for the second major storm in a week as Lili gained strength and ripped toward the U.S. Gulf Coast.
Coastal residents scrambled for higher ground and barricaded their homes and businesses, less than a week after Tropical Storm Isidore blew through the region. The storm flooded hundreds of homes and caused an estimated $100 million in damage.
Lili entered the Gulf of Mexico on Tuesday as a Category 2 hurricane with winds of 110 mph.
The threat of a hurricane packing high winds and a tidal surge greater than nine feet prompted officials to direct evacuation of the Beaumont-Port Arthur area in Texas early Wednesday.
Emergency management officials in Jefferson County appealed to the county's 250,000 residents to evacuate their homes, said John Cascio, the county's emergency management coordinator.
It was the area's first countywide evacuation since 1992, when Hurricane Andrew threatened the coast before slamming into Louisiana.
In Galveston, Texas, county officials had not directed any evacuations as of Wednesday morning, but voluntary evacuations already had begun, emergency management coordinator Eliot Jennings said.
Forecasts showed Lili heading for the middle of Louisiana's coast, and officials warned that areas could be inundated with as much as 20 feet of water.
CBS News Meteorologist George Cullen says all indications are that landfall will be somewhere along the western shores of Louisiana, probably early Thursday afternoon.
Cullen adds that the winds pose a worse danger than the torrential rain which is also expected.
But flooding is a concern.
"It would take us under water, it would be disastrous," said Ruth Fontenot, mayor of New Iberia, a historic Cajun town of 35,000 about 10 miles from Vermilion Bay and 25 miles from the Gulf.
At nearby Avery Island, the home of Tabasco hot pepper sauce, McIlhenny Co. officials planned to shut down Tabasco bottling operations if Lili pinpoints Louisiana.
"We boarded up and battened things down," said Tony Simmons, executive vice president and a great-great-grandson of Tabasco inventor Edmund McIlhenny.
"We're bottling right now and we're not anticipating anyone running out of Tabasco," Simmons said Tuesday afternoon. Avery Island is the company's only bottling facility.
Lili has already barreled through the Caribbean, killing seven people in Jamaica and St. Vincent and driving tens of thousands of Cubans from their homes.
NASA postponed Wednesday's shuttle launch because of the storm. The space agency said it did not want to take a chance of launching Atlantis from Cape Canaveral, Florida, only to have the hurricane bear down on Houston, home to Mission Control. NASA said Thursday would be the earliest the launch could occur.
In Grand Isle, a vulnerable barrier island south of New Orleans, workers raced to repair a 2,500-foot beach levee washed out by Isidore. Grand Isle officials ordered a mandatory evacuation beginning Wednesday morning.
Meanwhile, New Orleans officials mulled over possible evacuation problems.
Officials talked about closing Interstate 10, a major evacuation route out of the city, if the highway floods as it did during Isidore.
Many Gulf Coast residents had nothing on their minds but getting away from Lili.
Tony Buffington, a Mormon leader in New Iberia, said he and his wife called more than 100 church members to tell them to get out. The Buffingtons planned to leave with their family and friends.
"I'm packing everything tonight. I packed my mom's house today. And I'm going to sit up all night and watch what happens to the hurricane on my computer," Cindy Buffington said.
Along the Louisiana and Texas coasts emergency officials urged residents to evacuate, though it was too soon Tuesday to say where Lili could hit.
"The hurricane is very much like a pinball being moved around between the large bumpers of clockwise and counterclockwise rotating air, so it depends in the high and low pressure systems," said Frank Lepore of the National Hurricane Center.
The average prediction error is 150 miles on either side of the hurricane's projected path, Lepore said.