Sydney, home to more than 5 million people, received 111mm of rainfall over the 24 hours to Friday morning, data at Australia's Bureau of Meteorology showed, just shy of mean rainfall of 121.5mm for the month of April.
Rains could intensify through Friday with up to 200mm expected in some regions before a coastal trough drifts east towards the Tasman Sea on Saturday, the weather bureau said.
"This is a significant weather event ... it is most important that you don't take unnecessary risks at the moment," New South Wales State Premier Chris Minns said during a televised media conference.
The heavy rains damaged rail equipment at a major train station in Sydney, delaying morning commuters.
Emergency crews in New South Wales received more than 500 calls, and seven people were rescued from flood waters as warnings were issued for several rivers in the east.
Warragamba Dam, which supplies 80% of Sydney's water supply, could spill over on Monday after the storm eases, officials said.
"We require about 90mm of rain to fill Warragamba Dam ... we're expecting 100mm to 150mm," Water NSW chief executive Andrew George said on Friday.
"The spill will occur likely when the rainfall event has moved on, so it is very important that the community remain vigilant."
The dam, on the city's south-western fringe, was 96.3 per cent full on Friday morning, AAP reports.
People are being told to stay indoors as damaging winds and heavy rain hit, causing the potential for life-threatening flash flooding. Drivers are being warned to avoid non-essential travel as the dangerous storm system travels along Australia's eastern seaboard.
Premier Chris Minns advised residents to remain alert and up-to-date with warnings in their local areas.
"It is a volatile event and we need to make sure that we've got the latest information ... but it does require everybody being alert, particularly in the next 24 to 48 hours."
An inland low and coastal trough joining forces over NSW are forecast to deliver the significant falls.
"We're expecting the interaction between these systems to really increase the rainfall over eastern NSW," the Bureau of Meteorology's Helen Reid said.
"We're going to see widespread rainfall with heavy to locally intense rainfall expected."
Authorities warned 24-hour rainfall totals on Friday and Saturday morning could top 200mm in Sydney and on the south coast, with as much as 300mm dumped on the Illawarra escarpment overlooking Wollongong.
The ongoing intense downpours would drive "dangerous and life-threatening flash flooding" from Friday evening, NSW's State Emergency Service has warned.
The SES is urging residents of Sydney, Gosford, Wollongong, Nowra, Batemans Bay and Goulburn to stay indoors.
The agency responded to 552 incidents in the 24 hours to 5am on Friday, including seven flood rescues.
"Six of those related to people in vehicles, so we are asking people not to travel if they don't need to," NSW SES chief superintendent Dallas Burnes told ABC TV.
Dangerous winds could uproot trees from the soaked ground and SES crews were being moved into position.
"We're keeping a very close eye on where those falls are landing to make sure that we've got teams ready to respond," Mr Burnes said.
Major flooding was possible along the Hawkesbury-Nepean River, which bounds Sydney, from late Friday.
Penrith, in the city's west, is likely to cop more rain in one day that it usually receives in an entire April.
The rain is expected to continue on Saturday before moving off the coast on Sunday.
The storm has already claimed a life in Queensland after the body of a man was found by his ute near Logan, while a 30-minute wave of rain in northern NSW flooded enclosures at a wildlife sanctuary on Thursday.
"Due to the amount of water dumped into the park, we have relocated our animals and the hospital (has been) re-located to a higher position," Byron Bay Wildlife Sanctuary said.
- Reuters and AAP
