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Hostels:

Kookaburra Lodge (1800 808 211):
Corner of Lindsay Street and Third Street
Arguably Katherine's most popular. Situated on large, clean grounds, if you're not going canoeing you can always rent out bikes from this backpackers and go for a spin in the surrounding areas. Beds in 4/8 bed dorms cost $14 per night

Victoria Lodge (1800 808 875):
21 Victoria Highway
Not as busy as the above so come here if you want to relax more. It's also nicely situated on Katherine Terrace. 4/6 dorm beds cost $15 per night

 
The blue kookaburra is a cousin of Queenslands kookaburra
The blue-winged kookarburra