SYDNEY: Thousands of homeowners remained isolated in Australia's flood-hit northeast Sunday, where authorities said days of torrential rain had created a vast "inland sea".

Swollen rivers peaked overnight, allowing clean-up operations to begin and evacuated residents to return to the northern New South Wales towns of Grafton and Kempsey, the State Emergency Service (SES) said.

But SES spokesman Greg Slater said up to 20,000 people in small communities remained cut off by the floodwaters, which have led to disaster declarations in NSW and neighbouring Queensland.

"We're concentrating our efforts on those communities in terms of resupply and provision of immediate medical assistance and medical supplies, also just the basic necessities, foodstuff and the like," he told Sky News.

Two people have died in the floods, which dumped one-third of southeast Queensland's average annual rainfall in just 24 hours.

NSW Premier Nathan Rees flew over the affected area Sunday and said it was difficult to grasp the extent of the floods, even from the air.

"It's an inland sea, and you see the (animal) stocks that are isolated and the towns that are isolated and you wonder where it's all going to go," he told reporters.

Rees appointed former police commissioner Ken Maroney to coordinate clean-up in the northern NSW region, which has been hit by three major floods since February.

"This will be a large-scale recovery effort to help restore the region," he said.

Clarence Valley mayor Richie Williamson said flood mitigation measures in most major towns withstood the rising waters overnight.

"Things are starting to get back to normal thankfully," he said.

"Last night it was touch and go as the peak arrived at Maclean. Thankfully the levee wasn't overtopped there. Things are also okay in Yamba as well, albeit very, very wet."

Floods unleashed by cyclonic rains in February saw much of Queensland declared a disaster area, with more than one million square kilometres (385,000 square miles) deluged and 3,000 homes damaged.

Further floods hammered the region last month, washing a number of motorists to their death and claiming the life of a 12-year-old girl who was swimming in a swollen weir.

The floods follow a once-in-a-century heatwave in southeastern Australia, in which more than 2,000 homes were razed by major wildfires and 173 people died.

Meteorologists have warned the extreme temperatures and downpours -- a common feature of Australian summers -- would only increase as a result of climate change.