Up to 187 millimetres of rain has fallen in the Williams River catchment since yesterday morning, while more than 230 millimetres was recorded at Tuncurry on the New South Wales central coast.
Water is expected to lap at the edges of houses at Dungog, in the Hunter Valley, as the Williams River rises.
The river is predicted to peak at about 8.5 metres this morning, while the Paterson River is predicted to reach 13 metres.
Hunter Region controller Greg Perry says the situation has been made worse by two recent floods.
"It's a fair large amount of water plus what we already had there from last week, coupled with the fact there was still a lot of water still sitting around from the January long weekend," he said.
"It just seems to get progressively worse each time."
Mr Perry says roads around Paterson may be closed from mid-morning and the town could be isolated for much of the day.
"That'll be a bit of an inconvenience there for some period of time," he said.
Rain eased in Sydney overnight but there is still a flood warning current for North Richmond and Putty Road.
"Today we should see some more rainfall and then we're expecting the showery conditions to stay around the Hunter and go up the mid-north coast around the northern Rivers," she said.
"Hopefully around the Sydney area we'll see that rain ease up and the Hawkesbury Nepean should come back down."