UP TO 400 people have been evacuated from homes and schools following heavy rain south of Sydney, the State Emergency Services (SES) says.

About 120 properties along Slacky and Tramway Creeks, Bulli, are at risk of flooding if an embankment holding back a dam at the old Bulli mine site collapses, SES spokesman Phil Campbell told AAP.

There is also a risk of the nearby Princes Highway and main southern rail line through Wollongong flooding.

"At this stage the risk is very low, however as a precaution the SES is evacuating those 120 properties," Mr Campbell said.

Between 300 and 400 people had left homes and schools by 1pm (AEST) on Wednesday.

Students at Bulli Primary School had relocated to Bulli High School, and evacuation centres had been set up at Thirroul Neighbourhood Centre and Woonona-Bulli RSL Club.

"We are working closely with the local council, the owner of the embankment, as well as the RTA, police and other emergency services to ensure that people are aware of the potential danger," Mr Campbell said.

The Bureau of Meteorology predicted there could be falls of between 70mm to 100 mm of rain by 3pm (AEST) in the Bulli area on Wednesday afternoon.

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