Sydney's road and transport network was in chaos and hundreds of people were rescued or forced to flee their homes after the city suffered the sort of weather seen once in a century.
"We've had a hell of a rain event," New South Wales Roads Minister Duncan Gay said. "It's that one-in-a-100-year event that you hear of."
Flooding closed dozens of roads and some rail lines and train stations, while ferries were cancelled and there were flight delays at Sydney Airport.
Authorities were called out to more than 1000 incidents on the roads and locals in Sydney's inner west were given evacuation orders.
Only the roofs of cars were visible on some streets and there were fears that hundreds of boats on Sydney Harbour could sink.
"We've got boats filling up with water from all this heavy downpour," NSW Maritime spokesman Neil Patchett told ABC Radio.
Across Sydney, 134mm of rain drenched the city over 24 hours in what the Bureau of Meteorology said was the heaviest rainfall in five years. About 119mm of rain fell on parts of the CBD, with the Observatory Hill weather station recording its highest daily rainfall total since 2007. In the city's west, 146mm fell on Merrylands.
The Cooks River, in Sydney's south, flooded when it hit 1.5m about 9.30am local time at Tempe Bridge.
Electricity provider AusGrid said power had been lost to 2000 homes and businesses at 60 different sites, including Chippendale, Brighton-Le-Sands and Lidcombe.
More than 20 people were evacuated from the Scalabrini Retirement Village in Austral, southwest Sydney, after the Bonds Creek flooded.
Residents of 20 homes in three streets at Marrickville were also told to leave because of severe flash flooding.
A waterspout terrorised a suburban street in Kingsford and there were reports of almost 200 students being evacuated from a primary school on the outskirts of Sydney.
Motorists were rescued from cars caught in flooding at Rossmore, Austral and Campbelltown. Fire and Rescue NSW responded to 18 road accidents in the seven hours to midday local time.
On the train network, flooding caused signalling problems at Town Hall, suspending services between Central and Martin Place.
There were delays on nine of Sydney's 16 main railway lines, while flights from Sydney Airport were delayed or cancelled, with a Qantas plane bound for Sydney forced to divert to Newcastle.
Two northbound lanes on the main deck of the Sydney Harbour Bridge were closed for emergency repairs.
Gay said roads had been closed across the city "that haven't been closed before".
"Our Traffic Management Centre indicates it is the worst day we've had in the 15 years it has been operating."
Gay said the flooding had even stopped some state MPs from attending Parliament on a sitting day.
He dismissed suggestions the widespread flooding had shown a need to improve road infrastructure across Sydney. "The roads are flooding because we've had a hell of a rain event - it is as simple as that. And when you get that situation, it certainly tests all your maintenance, and all your stormwater drains."
Jocelyne Basseal was making breakfast for her two young children when she noticed floodwaters creeping towards her front doorstep in Sydney's inner west.
It was overflow from the flooded Cooks River, which was swelling over Riverside Cres and into her home.
Before long, she was handing her children, 4-year-old Amelia and Jonah, 2, to two men in yellow uniforms who had climbed over a side gate and waded through metre-high waters in teeming rain.
"I had no idea at this stage how high the flood would reach," Basseal said. "It was traumatic for the kids."
The youngsters were among 15 people evacuated from Marrickville, in an area where 20 cars were under water.
A block away, eight cars and two motorbikes in an underground unit carpark were wrecked as raw sewage leaked from a downpipe.
It was also garbage collection day, which meant smelly debris was scattered everywhere, along with grass clippings from the nearby golf course.
The weather also caused grief south of Sydney, with torrential rain in the Illawarra and Southern Highlands and 5m waves rolling into beaches around Bega and Nowra on the state's south coast.
The State Emergency Service rescued 120 students and teachers from a Mittagong school who became trapped in the Belanglo State Forest.
Most of southern NSW remains on high alert as rising river levels threaten sodden communities with a fresh wave of flooding.
The town of Forbes, in the state's central west, remains firmly in the firing line, with the Lachlan River forecast to peak at 10.65m last night.
Residents have begun leaving the northern Victorian town of Nathalia after authorities warned a temporary levee may breach.
The Emergency Service issued a notice telling people to leave immediately because the levee could no longer be relied upon to hold back the rising floodwaters.
About 350 people attended a community meeting yesterday where officials strongly advised all residents of the town, about 230km north of Melbourne, to leave during daylight hours before a major flood breach occurred.
"The focus is very much on now making sure that the levee holds," a spokeswoman at the Shepparton incident control centre said.
"We've had an engineer who is monitoring it, but with the dampness ... we can't guarantee that something doesn't happen."
The swollen Broken Creek was expected to peak last night between 3.25 and 3.3m.