Residents in Camden and Chipping Norton in Sydney's southwest were ordered to leave on Thursday afternoon due to rising waters.
The alerts came after people in parts of Woronora and Bonnet Bay in the city's south were told to evacuate in the morning.
In Camden, numerous rescues were in progress on Thursday afternoon as the Nepean River burst its banks, with at least five people retrieved with State Emergency Service boats, footage aired on the Nine Network showed.
One group was ferried over fast-running waters after becoming stranded trying to herd their livestock to safety.
Warnings for possible evacuations are also in place for Stuarts Point on the mid-north coast, Stonequarry Creek, Picton and parts of Camden in Sydney's southwest, and Wallacia Weir in the Blue Mountains.
At Menangle, also on the Nepean, flood levels are expected to surpass the record set in April 1988, Bureau of Meteorology senior hydrologist Ailsa Schofield said.
The 1988 flood peak was higher than the levels reached in 2021 and in 2022, she said.
Major flooding is also occurring at Wallacia on the Nepean, and North Richmond on the Hawkesbury, with flood levels expected to exceed recent river heights seen there in March.
"There is also the significant risk of continued flash flooding in the Greater Sydney, Upper Hunter, Illawarra and South Coast areas from today and into the weekend," Ms Scofield said.
"So I'm really urging residents to stay up to date with the local weather and warning information and stay safe."
Water is spilling at Warragamba Dam, which was already at capacity before the latest burst of rain began.
"This is a highly dynamic situation," SES Acting Commissioner Daniel Austin said.
"These events are moving exceptionally quickly as was witnessed in the Illawarra this morning ... in the space of about three-quarters of an hour significant downpours, significant flash flooding, and a number of properties impacted by those flash events."
The SES has responded to almost 700 requests for assistance and had carried out 25 rescues by lunchtime Thursday, the majority for people caught out by flash flooding.
Flooding led to the urgent closure of several schools in Sydney's south and the Illawarra on Thursday, including Stanwell Park Primary, Dapto High School, Kanahooka High School, Kurnell Public School, Terara Public School, and Woronora River Public School.
On Friday, at least 23 schools will be closed due to severe weather, the Department of Education said, with another 13 schools teaching classes at different sites.
Schools closed on Friday include multiple Camden schools in southwest Sydney, Fairy Meadow Public School in the Wollongong area, Mount Kembla Public School in the Illawarra, and Weilmoringle Public School near the Queensland border.
Liverpool Mayor Ned Mannoun told Sydney radio 2GB there was a sense of deja vu in the area following flooding last month.
"We know what's going to happen, we just hope it won't get worse than last time," Mr Mannoun said.
The rain is expected to ease on Friday but the flood risk will remain into the weekend.
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