In this paper we address the problem of sound source location using the time difference of arrival (TDOA) technique in an environment containing stationary correlated noise. We present a robust low-complexity method for enhancing estimation of sound direction, augmenting the well-known Generalized Cross-Correlation with Phase Transform (GCC-PHAT) approach. In the proposed method, the estimated cross-spectrum of a correlated background noise is subtracted from the observed spectrum. This effectively removes the phase distortion introduced by the interfering noise and significantly improves the robustness of the sound direction estimate. We test the performance of this approach on data collected and processed with a low-resource embedded platform. Results illustrate substantially enhanced performance over the baseline GCC-PHAT sound localization.