A storm-tossed ship stuck outside Sydney Harbour with 2,500 passengers on a "cruise from hell" was on Wednesday finally able to dock as the city and surrounding areas endured a third day of chaos wreaked by heavy rain and high winds.

Australia's biggest city and regions to the north and south, including the Central Coast and Hunter Valley, have been battling cyclonic wind gusts and non-stop downpours since Monday, with emergency services dealing with nearly 10,000 calls for help.

Three elderly people died in the country town of Dungog on Tuesday, trapped in their homes as flash floods surged through, and police have grave fears for two others missing after a car was swept away by raging waters in Maitland, New South Wales on Wednesday.

"We've got a general idea where that vehicle is, but we're unable to get to it due to the rising water," local police Inspector Brian Tracey told reporters.

New South Wales state Premier Mike Baird asked the communities worst affected to "hang tough".

"The weather still remains dangerous and the conditions are dangerous so this is not a time for complacency," he said, although a severe weather warning for Sydney was later lifted.

"Every community can have this assurance that we will do everything possible we can to help them get back on their feet."

A handful of homes have been washed away by fast-moving floods, with countless others damaged by falling trees and power lines, which have also crushed cars.

The Insurance Council of Australia said it had received 19,500 claims, with losses estimated at Aus$129 million (US$100 million) from what has been described as a once-in-a-decade storm.

"I expect these numbers will rise quickly as home owners and businesses assess the damage to their properties and lodge claims with their insurer or through their insurance broker," council chief Rob Whelan said.

- Vomiting for two days -

State Emergency Service (SES) officials said crews had taken nearly 10,000 calls for assistance since Monday and carried out 100 flood rescues, with an enormous amount of work ahead.

"The more difficult days are still ahead of us in terms of getting on top of the scale of this event," said SES Commissioner Adam Dent.

Power remains cut to around 200,000 homes and businesses, utility provider Ausgrid said, and more than 160 schools were closed.

In Sydney, Manly Dam began overflowing but police urged people to remain calm, saying there was no immediate threat.

"The dam is spilling but it's designed to spill. The dam is at no risk of collapse," SES Deputy Commissioner Steven Pearce said, while warning motorists against attempting to drive through flooded roads.

"It's a big risk to yourself, could be catastrophic and a big risk to rescuers if we have to come to retrieve you. So please, do not be stupid."

Beaches throughout the region remained shut due to heavy and dangerous surf but the monster seas abated enough for a ship that had been stuck on the open ocean outside Sydney Harbour since Tuesday to finally dock.

Getting their feet back on dry land was a huge relief to the 2,500 passengers, with the Sydney Morning Herald referring to it as "the cruise from hell".

"So many people have never wanted a holiday to end so badly in their lives," said Rachel Browne, one of the newspaper's correspondents who was on the cruise from the South Pacific with her family.

"Most people have just been vomiting for the last two days."