UPDATE: THE Clarence River at Grafton, in NSW, appears to have peaked just 2cm below the top of the levee wall.
Sam Colwell of the Clarence-Nambucca State Emergency Service said the river was believed to have peaked at midday at a record level of 8.08m.
"It's looking reasonably safe at this stage. Even if did overtop in some places, there's a tiny bit of extra room on the freeboard, so it's just a little trickle, not catastrophic," she said.
The levee was breached along some parts of the wall but Clarence Valley Mayor Richie Williamson said council workers contained it with sandbags and were now concentrating on towns downstream, including Iluka, Yamba, Ulmarra and Maclean.
"It's looking more positive but the situation is still very dire. It's improving for Grafton and our attention is now on Ulmarra and the levee system around Maclean," Mr Williamson said.
Premier Barry O'Farrell will visit the flood evacuation centre at South Grafton High School this afternoon.
This is the fourth time the Clarence has flooded in the past four years.
"This is a sight that has never been seen by white man. The Clarence has never been recorded above 7.9m, it's an awesome spectacle and still a very dangerous thing," Mr Williamson said.
"Whilst the attention is still on the flood itself, it will very quickly move to the recovery phase, which is often very long and drawn out, and over time we are going to need some assistance."
As the threat recedes in Grafton, crews are working across the state to restore power to thousands of properties after trees and debris became tangled in powerlines.
More than 19,000 homes are blacked out in the area stretching from Kempsey on the mid-north coast, right up to the Queensland border.
Essential Energy said a helicopter will hopefully be patrolling areas isolated by floodwaters in the Byron hinterland by this afternoon and extra crews from across the state are being deployed to boost the recovery effort.
With damage to high voltage powerlines and service lines to individual homes, acting regional general manager Daniel Bylsma said it might be some time before all residents were reconnected.
"Our main efforts are focused on restoring power for as many customers as quickly and safely as we possibly can, but it may be several days before all supply is restored to outlying areas and individual residences," he said in a statement.
Meanwhile, across Sydney and the Central Coast, Ausgrid crews are working to restore power to more than 300 homes after heavy downpours and strong winds brought down trees and branches.
"They are getting through them as quickly as they can," a spokesman from the electricity company told AAP.
Power is back for all homes and businesses in Forestville and Frenchs Forest in Sydney's north, after a fault on high voltage equipment cut off power to more than 1100 properties for two hours this morning.
But in Bankstown, in Sydney's southwest, 1900 people lost supply this morning after a fault in an underground cable.
SES spokesman Phil Campbell later said floodwaters had isolated more than 41,000 people across the state, including 18,000 in the Tweed Valley.
Seven-metre waves at the mouth of the Tweed River were creating "a dam" so floodwaters were having "a bit of trouble getting out", Mr Campbell said.
No properties were in danger, he said, and some of those cut off could expect to regain full access to roads and properties in the next three to 12 hours.
Across NSW, there have been 48 flood rescues and more than 3500 calls for help.
In Grafton, it would be some time before the SES would let people back into their homes, Mr Campbell said.
"We need to be confident that there is going to be no unforeseen second peak.
"It might not be until tomorrow until some people can get back."