New South Wales' largest inland city, Wagga Wagga, appeared to have gained a reprieve last night as the swollen Murrumbidgee River retreated after threatening to breach as 11m levee protecting the business centre and hundreds of homes.

But thousands of evacuated residents won't be able to return home until at least tomorrow.

About 9000 people have been evacuated, joining more than 12,000 others in NSW, and thousands of others in Queensland and Victoria.

A state of emergency was declared for Wagga Wagga late yesterday by NSW Premier Barry O'Farrell.


"My advice is that if the levee is breached, it may not be possible for people to return to town for approximately three days," he told the state Parliament.

Last night, Bureau of Meteorology officials said the river level had started falling.

But the NSW State Emergency Service said residents were not being allowed back to their home until the all-clear could be given.

"It is a matter of safety at the moment," said SES official Rolf Poole.

Driven by torrential rain, huge volumes of water are surging down river systems in the three states, inundating towns, cutting roads, wrecking bridges and drowning hundreds of thousands of hectares of rich agricultural land.

The crisis will move downriver for the next few weeks, leaving devastated communities and a clean-up bill already put at well over A$1 billion ($1.24 billion) for roads, bridges, drains and other infrastructure.

The disaster follows earlier summer flooding, and comes after last year's devastating floods in the three states and Queensland's Cyclone Yasi.

In Queensland, as the Mary River flooded parts of the northern cities of Gympie and Maryborough, meteorologists were watching a low-pressure system off Hervey Bay, adding strong winds to the state's wild weather.

Late yesterday fears of the low developing into a cyclone were easing, although emergency centres were prepared as a precaution in the Noosa hinterland towns of Cooroy, Pomona and Cooran.

O'Farrell said in Wagga Wagga yesterday that the repair bill for roads alone was likely to exceed A$500 million. Similar estimates have been made in Victoria.

Authorities have not even begun to tally the cost to farm production, business losses and other damage.

With huge areas of farmland underwater, forecasters will have to revise glowing predictions following years of hardship and drought. For the first time in 30 years farms in all states and all sectors were expected to move comfortably into the black.

But 75 per cent of NSW is underwater or threatened with flooding and more than 40 local government areas have been declared disaster-affected since Christmas.

In the flood-stricken Victorian city of Shepparton, Emergency Management Minister Nicola Roxon yesterday announced extra federal aid for 14 NSW towns - including Wagga Wagga, Hays, Forbes, Gundagai, Parkes and Young - and four local government areas in Victoria.

Yesterday flood warnings were in place for 16 NSW river systems, seven river systems and the Snowy River catchment in Victoria, and 10 rivers and catchment areas in Queensland.

In Wagga Wagga, a farming and transport hub of 57,000 people midway between Sydney and Melbourne, the 9000 evacuees fled their homes after a late-night alert on Monday.

Some then had to move again as evacuation centres came under threat.

The city straddles the Murrumbidgee River, and its centre is protected by the levee that runs alongside the business district.

Although it is 11m high, its critical height is 10.7m and it could fail if water topped this level.

Earlier estimates yesterday were forecasting a flood peak of 10.9m

About 200 homes have already been flooded in the city's north, some to the eaves, and hundreds of volunteers were filling sandbags yesterday in a desperate race against time, helped by soldiers from a nearby training camp.

Further evacuation orders were issued for the town of Urana, about 100km south of Wagga Wagga, at Forbes, on the Lachlan River west of Bathurst, and Yenda, near Griffith, northwest of Wagga Wagga.

In the far west, areas around Bourke and Menindee are also facing their worst floods for decades.

In Victoria, the border town of Nathalia, west of Albury, is expecting its worst flood in 20 years.

But in Queensland easing rain raised hopes in Gympie and Maryborough - both hit hard by earlier flooding - where homes and businesses have again been evacuated as the Mary River continues to rise.

- Additional reporting, AAP