"This is going to be catastrophic today," SES Deputy Commissioner Steve Pearce told Macquarie Radio.
More than 20 people have been rescued from floodwaters, 10 of them from rooftops in Stroud, just north of Newcastle.
A woman, who was trapped on a roof in Stroud, is understood to have suffered a cardiac arrest and is in a critical condition in hospital.
Waves of up to 11m have been reported off Sydney's coast and more than 4000 calls have been made to SES over the past two days.
"There have been multiple persons trapped in vehicles, being trapped in buildings and being trapped on top of buildings while trying to take refuge from floodwaters," Mr Pearce said.
More than 100 NSW schools have been closed and gates closed at national parks as a severe weather warning continues for Sydney, the Hunter and the Illawarra.
A cruise ship is stuck outside Sydney Heads because of a massive swell - and it may be there for the next 48 hours.
Passengers were due to disembark the Carnival Spirit on Tuesday morning.
Thousands of trees and hundreds of power lines are down, leaving about 215,000 homes and businesses without power on Tuesday afternoon.
The SES is anticipating a lot more calls.
"This weather system isn't abating - we still have cyclonic winds in that area," Mr Pearce said.
Residents in low-lying parts of Newcastle may also be significantly impacted from the heavy rain on Tuesday afternoon.
There have been recorded wind speeds of up to 130km/h.
-AAP
