Australian authorities declared a natural disaster yesterday in a southeastern farming town where raging floodwaters forced the evacuation of hundreds of people.

The swollen Castlereagh River peaked at 5.14 metres just before midday in Coonamble, the weather bureau said, after 1,200 residents in the New South Wales town were urged to leave their homes for higher ground.

Forecasters had feared the river would surge to a 40-year record of 5.5 metres and break its banks, putting hundreds of homes in the town at risk.

But the threat eased late in the morning when it appeared water levels had gone down slightly, the Bureau of Meteorology said in a statement.

"This indicates that the river is at its peak with major flooding," it said.

Heavy rains have pelted the drought-parched region since late December, with hundreds of centimetres of rain unleashed by ex-tropical cyclone Laurence.

Several towns have already been cut off by the once-in-a-decade deluge but no lives have been lost.

New South Wales Premier Kristina Keneally declared the town a natural disaster zone, making emergency funds available to hundreds of farmers and other residents.

Flooding rains were also recorded further north, in the neighbouring state of Queensland, while fires raged in the country's west.