The deluge, which has sparked dozens of rescues and left about 7 275 people isolated in various parts of New South Wales state has also impacted Queensland to the north where homes have reportedly been inundated.
"From the air it looks like an inland sea," New South Wales Premier Barry O'Farrell said after visiting the region.
Evacuations have been ordered from some houses and businesses in the New South Wales town of Moree, where more than 600 people have registered with an evacuation shelter as the Mehi River peaked, the State Emergency Service said.
"The town of Moree is inundated with water - so north Moree is not only cut off, but many of the properties there are flooded," O'Farrell said.
"As you fly over the centre of the town there are streets that look like canals that have more relevance to Venice than north western New South Wales."
Homes cut off
A Royal Australian Air Force C-130 Hercules aircraft was moving bedding to Moree, as locals sandbagged buildings against the Mehi and rising Gwydir River as the water hit levels not seen in decades.
Diana Smith, who lives about 20km outside Moree, said her family was cut off from evacuation centres by the floods.
"We're on the Mie Mie Creek which has burst its banks and it's virtually just... we're like an island - just a sea of water all around us," she told the broadcaster ABC.
"It's quite scary actually. We can't get into Moree and we can't get any further east. We would have to go by chopper if we wanted to evacuate."
The Mehi River has now peaked but the water is expected to remain for several days and authorities have warned of the dangers of floodwaters.
"It's a huge logistical operation with a major flood," SES Deputy Commissioner Steve Pearce told the Seven Network.
City at standstill
"There have been some circumstances where we've had to use one if not all of our 18 helicopters to airlift people out of some isolated areas.
"Fortunately most people abided by those evacuation orders."
Further north in Queensland state, about 15 homes have reportedly been flooded after the Maranoa River swelled while scores of people spent the night in evacuation centres.
The floods come just over a year after massive floods deluged much of Queensland and northern New South Wales, swamping mines and farmland, wiping out entire hamlets and bringing the city of Brisbane to a watery standstill.
Queensland Premier Anna Bligh said close to 200 people had been evacuated in Mitchell, while the hospital had also been evacuated and five schools closed amid fears the Maranoa River could reach a record level of 10m.
"Thoughts with people of Mitchell - highest flood on record overnight, 9.6m," she tweeted on Friday.
As the rains continued, Moree mayor Katrina Humphries said while her town was well prepared, there was no telling when the downpour would end.
"Mother Nature has her way and she'll stop crying when it suits her," she said.