Authorities have sent emergency alerts to tens of thousands of people in NSW's Hunter region as forecasters warn wild weather will worsen after earlier claiming three lives.
Conditions described as "cyclonic" have wrought havoc on the Hunter, Sydney, Central Coast and Illawarra regions, with rescue crews called to more than 1,000 storm-related incidents and more than 200,000 properties losing power.
Three elderly residents were found dead in the town of Dungog, north of Newcastle, but authorities said the circumstances were still being investigated.
Locals said several homes had been washed away, and a woman and two children were rescued from a house as it was washed down a street in nearby Greta.
The State Emergency Service (SES) sent emergency alerts to more than 100,000 mobile phones in the Hunter this afternoon.
It warned of "rapid rises and high velocity flash flood water in local creeks, watercourses and urban areas" in Newcastle and surrounding areas.
SES spokesman Michael Langley said the flash flooding threat was serious.
"We don't issue these emergency alert notifications without a lot of thought and a lot of input from the Bureau of Meteorology, so it's a real issue," he said.
"We can already confirm there has already been some loss of life today regarding this flash flooding so take it seriously - don't panic, but be alert."
An evacuation centre was set up at Dungog High School following reports at least 20 homes had been inundated, but authorities encouraged people to find their own accommodation if they could.
Local police commander Jeff Loy said the three deaths occurred in different locations.
"Two males and one female all perished in different circumstances," he said.
"The police are investigating the cause of those deaths."
Premier Mike Baird said the loss of three residents was a tragedy.
"It's hard to imagine that they were just going about their lives a short time ago," Mr Baird told 1233 ABC Newcastle.
"Our thoughts and prayers are with their family and friends."
He said a state-of-emergency declaration was "under consideration".
"There is an expectation as the cell moves south from the Hunter down towards Sydney that there could be an increase in winds," he said.
"At the moment winds are averaging ... peaks of up to 100 kilometres per hour.
"That could increase between now and midnight as these cells come together."
Earlier, he encouraged people to leave work early to avoid being caught in the worsening weather.
"We are calling for bosses to be flexible, people to make arrangements in an orderly way to start to head home as soon as you possibly can."
The weather caused major transport disruptions, including cancellations and delays to train, bus and ferry services.
Transport authorities urged people to avoid all non-essential travel, both by car and public transport, and check timetables for updated information.
More than 100 sets of traffic lights were blacked out and some major road networks were affected by flooding.
A limited rail service was operating from Sydney's Central Station to the central coast.
Sydney Airport advised passengers to check with airlines for information about delayed and cancelled flights.
Electricity distributor Ausgrid said there were more than 4500 reports of hazards, such as fallen wires, across its network.
Crews were responding to thousands of urgent incidents and restoring power to more than 200,000 properties would take several days, he said.
"For those customers that are in more inaccessible areas [it will take until] towards the end of the week or even more," he said.
"The problem is in areas, for example, around Maitland where we are being advised we haven't seen the peak of floodwaters, so crews aren't able to get into the area to make their assessment."
Fire and Rescue NSW said it had been called to more than 1200 storm-related jobs since 6.00am, including 12 building collapses.
The organisation has deployed extra resources to Newcastle and the Hunter area.