SYDNEY - Houses have been destroyed, up to 2000 homes are without power and two injured people have been taken to hospital after a powerful storm tore through Lennox Head on the NSW north coast.

A waterspout hit the township about 7.30am (AEST) on Thursday morning, causing widespread damage and chaos.

NSW Emergency Services Minister Steve Whan says 12 homes have been demolished by wind and hail.

He said another storm front is approaching the area, potentially causing major problems for those whose homes have already been damaged.

"Up to 2000 homes are currently without power and the power company is doing all it can under the circumstance to restore power to homes," Mr Whan said.

"Our recovery controllers have set up an evacuation centre at the Bowling and Sports Club in Stewart Street, and people with damaged homes or needing help can go there where Community Services will provide care for displaced persons."

Six people had been hurt at Lake Ainsworth Caravan Park, Mr Whan said.

A mother and her daughter have been taken to Ballina Hospital.

One person was earlier reported missing but had since been found safe, Mr Whan said.

"Weather in the area is still very severe with offshore water spouts threatening to come on shore. We are expecting flooding to develop soon and may last for several days," Mr Whan added.

The Pacific Highway is cut between Ballina and Byron Bay by flooding.

Lennox Head resident Andres Spark told AAP one family had a lucky escape from the wild winds.

"There was one house with a boat out the front and it flew into the house," he said.

"It flew through the verandah, there were three or four people home at the time."

Mr Spark said the mood in Lennox Head was one of shock and fear.

"People are scared. There's going to be another one and we don't know what strength it's going to be," he said.

Businesses in the township were closed due to the power outage.

"The pub doesn't have a roof any more," Mr Spark said.

Lennox Head cafe owner Lisa Bundock said she was amazed her business escaped relatively unscathed.

Properties all around her sustained serious damage, including roofs torn off, smashed windows and damaged walls.

Power and telephone lines were also knocked out in the storm.

"We've been incredibly lucky," Ms Bundock told AAP.

"Some of our power has been knocked out but we've got the phone line."

Her staff have begun setting up a soup kitchen for locals.

The State Emergency Service says the freak storm is likely to be just the first of many on Thursday.

More waterspouts and violent thunderstorms are likely to leave a trail of destruction throughout the day as the deep-low pressure trough which caused the Lennox Head twister moves south, an SES spokesman told AAP.

Local bakery owner Dave McGuiness said a mini-tornado swept down the main street of Lennox Head.

"It went towards the pub, hit the pub and the roof's come off the pub and then proceeded into the street behind the pub and it's really just destroyed that street to pieces.

"All the telegraph poles are down, houses are just, you know, destroyed really.

"It's gone onto the caravan park at the end of that street and ripped the caravan park to shreds," he told the Nine Network.

- AAP