Roads have been cut off, with 18 evacuation orders in western Sydney alone and warnings of more to come.
"This is a life-threatening emergency situation," Stephanie Cooke, emergency services minister for the state of New South Wales, said.
The area was hit by flash flooding in March, killing 20 people.
"We are now facing dangers on multiple fronts - flash flooding, riverine flooding and coastal erosion," Ms Cooke told a media briefing.
Her warning came as the Bureau of Meteorology said up to 350mm of rain had hit certain areas, risking flooding along the Nepean River.