Hundreds of people have been rescued from floodwaters that have isolated dozens of towns in Australia’s most populous state New South Wales and forced thousands to abandon their homes as record rain continues to inundate the country’s east coast.

Around 18,000 people had been evacuated from flooding in New South Wales by Monday and emergency services feared up to 54,000 people could be displaced with rain forecast to continue until Wednesday.

Prime Minister Scott Morrison told Parliament that 35 communities in northern New South Wales had been isolated and emergency services had conducted more than 700 flood rescues.

"We are grateful at this point that no lives have been lost so far,” Morrison said. "But weakened foundations for buildings, for roads and trees, they all create risk, as do downed power lines and rising water levels.”

A year ago, vast swathes of New South Wales had been charred by unprecedented wildfires following years of drought that gripped most of the state. Some of the same areas were now being inundated by one-in-50-year and one-in-100-year rain events.

New South Wales Premier Gladys Berejiklian said up to 38 parts of the state had been declared natural disaster areas. "I don’t know any time in our state’s history where we have had these extreme weather conditions in such quick succession in the middle of a pandemic,” Berejiklian told reporters.

"So, they are challenging times for New South Wales.”

Thousands of people have been affected with 40 flood warnings and 20 evacuation orders along the state’s Mid North Coast, and in western Sydney. Houses had been submerged and destroyed while several communities had lost power.

Heavy rain will remain a serious risk on Tuesday for the Mid North Coast, where communities are facing the worst flooding conditions since 1929. Communities along the Hawkesbury River were also bracing for the worst flooding in the area since 1961.

Bureau of Meteorology national flood services manager Justin Robinson described the rainfall as a "very significant flood event for New South Wales.” "I’ve been a flood forecaster with the bureau for 20 years and this is probably the worst flooding that I’ve experienced,” Robinson said.

Nepean River levels at Penrith on Sydney's western outskirts had peaked late Sunday at a higher level than the 1961 record and the Hawkesbury River floodwaters at Windsor, northwest of Sydney, were expected to peak late Monday around a 1988 record level, Robinson said.

The flooding comes in stark contrast with the devastating bushfires that struck Australia in late 2019 and early 2020, when nearly 7% of NSW land was scorched.