About 130,000 homes are in the path of an overflowing dam in southwestern Sydney as rain continues to hammer the NSW capital.
The Warragamba dam began overflowing at 3am on Wednesday.
Deputy Premier Paul Toole said there had been water released from the dam over past days to reduce the amount of water being held.
But with further heavy rainfall there is a "real likely risk of flooding".
Mr Toole said the floods were "an important message for those who want to stand in the way of building dams and raising dam walls".
"Stop coming up with excuses and not allowing these dams to be built or raised where they need to be.
"Protecting property and protecting lives should be the number one priority," the deputy premier said.
Warragamba has been subject to much debate over the past decade about the proposed raising of its dam wall, including concerns that doing so will threaten native wildlife and flood Aboriginal cultural heritage sites and world heritage areas in the Blue Mountains.
Premier Dominic Perrottet said the government was committed to the "very complex project" and has been "working through the raising of the Warragamba dam wall" for about 11 years.
"There are not just construction challenges, there are also environmental challenges that come with that project," Mr Perrottet says.
"Our ultimate aim here is to take action to protect communities."
He says these discussions should continue on a regular basis, not just when natural disasters hit, and taxpayer funds should be "investing where it's actually going to make a difference and save lives".
But building more dams or raising their walls are not the only methods for flood mitigation.
Former NSW SES deputy director general and floodplain management consultant Chas Keys says he "is all for flood mitigation" but the raising of the Warragamba dam wall would have serious upstream environmental costs, and would not eradicate floods as it does not capture tributaries downstream that contribute to flooding.
"You might take a little off the peak, you might make extreme floods rarer, but you won't eliminate them," Dr Keys told AAP.
Dr Keys said the government was overstating the benefits of raising the dam wall, and dams and levees were not the only solution.
"You can build evacuation routes, you can educate people to understand flood warnings, which they don't at the moment ... we give them a (flood) height, we don't say what it means, we don't help or advise them on what they need to do."
A better solution would be to not have people living on known, significant floodplains, but as Sydney continues expanding the population is expected to continue growing significantly in the Hawkesbury-Nepean area, which Dr Keys describes as "probably the worst flood environment in NSW".
Raising the wall could also mislead people that they're safe from floods and make them less likely to heed evacuation and flood warnings.
Australian National University environment professor Jamie Pittock similarly said flood mitigation dams were not a "magic bullet".
He pointed to the relocation of the Queensland Lockyer Valley town of Grantham following devastating flooding in 2011 as proof the NSW government should begin relocating flood prone homes and businesses, not building dams so more people can live in low lying areas.
