Fears that a levee holding back the swollen Murrumbidgee River would fail eased Tuesday as water levels began falling after nearly 9,000 people fled their homes in Australia's flood-hit southeast.

Floods have hit three eastern states this week, sweeping two men to their deaths after they attempted to cross waterways in cars while inundating hundreds of homes and causing millions of dollars in damage.

Prime Minister Julia Gillard said the military had been deployed to several areas and was on stand-by to help other stricken towns if the crisis deepened.

"We've got floodwaters across New South Wales, Queensland and Victoria," she told reporters.

"For the people of Wagga particularly, this is a very anxious time."

Some 8,800 people were ordered to evacuate the city of Wagga Wagga and its surrounds where the Murrumbidgee was predicted to reach 10.6 metres (35 feet), just below the levee's limit.

But it peaked at 10.56 metres late evening and was now in "a falling trend," the State Emergency Service (SES) said.

Spokesman Rolf Poole told reporters that despite the receding waters, residents would not be able to return until it was safe to do so, which he said could be 36 hours.

"We're not going to allow people back into Wagga Wagga at this stage," he said.

While the levee was so far working to protect the town's commercial centre, across the river in North Wagga Wagga many of the homes from which 600 people had been evacuated were swamped as storm defences were over-run.

"The reports we are getting from Wagga are that a significant number of homes in that area have been affected," Richards told AFP as the river rushed towards a level not seen since 1844.

Wagga Wagga has been hit by several significant floods since the earliest European settlement in the 1840s, and officials said residents had responded well to the latest evacuation order.

"I knew where my house lies -- if the levee were to overflow my street, it was pretty quickly going to go -- so I went," Melina Skidmore told state broadcaster ABC.

Mayor Kerry Pascoe said earlier he had inspected the levee and it appeared solid but that in North Wagga Wagga some 180-200 homes were damaged -- ranging from water up to the roof to flooding on the grounds of the property.

Officials said while the flood had peaked in Wagga Wagga, there were fears that the waters would create an ongoing emergency for weeks to come as the waters gushed to communities downstream.

Around New South Wales state more than 13,000 people have been asked to leave their homes due to flooding, with at least 250 properties already inundated and a number of rural communities isolated by the rising waters.

Officials were Tuesday doorknocking residents in the town of Forbes north of Wagga Wagga where the Lachlan River has created major flooding.

Flooding has also hit rural regions in Victoria and Queensland states.

The National Farmers' Federation said while it was too early to put a cost on the disaster, cotton crops had been damaged, as well as grain silos, while many livestock had been swept away.

Eastern Australia was hit by devastating floods in early 2011 which claimed more than 30 lives, flooded thousands of homes and left vast swathes of the country swamped, including the Queensland capital Brisbane.