Yesterday, more than 400 in Whanganui were still unable to return to their homes. A state of emergency in Rangitikei had been lifted, but others remained in place in Whanganui and Taranaki.
Mr Key said the flood taskforce would be made up of four teams of six people, who would work for 14 weeks on the clean-up. "We will continue to work with councils to assess the situation - thankfully the rain has stopped for now and rivers are receding."
He said the funding was focused on a short-term-fix programme, but there would be bigger costs involved with repairing issues such as slips and roading damage.
Whanganui Civil Defence controller Kevin Ross said damage in the city could reach tens of millions of dollars, and could take up to a month to clear. It was Whanganui's worst flood in recorded history and the city was in "clean-up mode" now river levels were receding.
Whanganui Mayor Annette Main said planning was needed to evacuate isolated people in rural areas or get them supplies in coming days.
Pipiriki residents in the Ruapehu district are expecting to be isolated for about a week because of two major slips on the Pipiriki-Raetihi Rd.
Ruapehu District Council civil defence controller Margaret Hawthorne said all non-residents were to have been evacuated by helicopter by nightfall, and residents were being supplied with at least a week's food. Three of the eight evacuees were pregnant, and one was a child.
Across the flood-hit areas, buildings were inspected for damage and power was restored to larger communities.
In smaller areas, power was still out or only partially connected, but that was expected to improve by yesterday evening.
Residents were warned to keep treating all floodwaters and flooded areas as contaminated, after sewerage lines became damaged around the regions.
Some homes also needed to be decontaminated before their owners could return.
Major road closures including at the Manawatu Gorge remained in place yesterday as officials dealt with slips and other road damage.
Crews including abseilers were working to reopen highways and the New Zealand Transport Agency (NZTA) said getting traffic flowing through the gorge was a major priority.
"The hillside has been completely saturated, with curtains of water streaming off it, and we need to wait for it to settle down and dry out before we can be confident the slope is safe and stable," NZTA regional performance manager Mark Owen said.
Today's weather
•Whangarei: Showers clear evening, then fine. Fresh southerly. High 12 Low 6
•Auckland: Fine, morning frosts in sheltered places. Cool southerlies.
High 11 Low 5
•Hamilton: Fine, morning frosts. Cool southerly breeze. High 11 Low -1
•Tauranga: Fine, morning frosts. Cool southerly breeze. High 12 Low 4
•Whanganui: Cloudy periods, chance shower. Cold southerlies easing.
High 11 Low 3
•Wellington: Showers, mainly east and south. Cold southerly easing.
High 8 Low 6
