Large parts of Australia's coastal northeast were flooded on Sunday in a spreading environmental disaster as thousands of residents fled their homes to avoid the runoff from a Christmas deluge.

Queensland State Treasurer Andrew Fraser described the floods as a 'disaster of biblical proportions' and said the ultimate cost would exceed A$1 billion ($980 million).

The town of Rockhampton, 600 km north of the state capital, Brisbane, and with a population of 77,000, was cut off, with 40 per cent of its houses expected to be flooded in coming days in waters over 30 feet deep.

Australia's Bureau of Meteorology has said flood waters in the town could reach nine metres on Monday and peak at 9.4 metres on Wednesday, a level similar to floods that hit in 1991 and 1954.

Parts of tropical Queensland could remain cut off for days by the floods, which have had a devastating impact on the state's economy, with coal mining and farming particularly badly hit.

One person was confirmed dead, a 41-year-old woman who disappeared when her car tried to cross the flooded inland Leichhardt River. Police said her body had been found about two km away.

The rain has eased, but the waters are gradually working their way down the state's river systems to the coast.

Roads and rail links have been cut along the east coast, while Rockhampton, at the mouth of the Fitzroy River, was slowly being inundated. Flood waters have already reached 8.8 metres in parts.

Mayor Brad Carter said the town was cut off and the river was rising faster than expected. A race against time was under way to lay enough sandbags.

Viewed from the air, crops and isolated townships were all flooded, with only roofs and the tops of trees and yellow road signs visible in places above the surface of the brown water.

Thousands have been forced from their homes by the disaster, which in the last week has left an area larger than France and Germany under water and disrupted the lives of more than 200,000 people.

With more than a dozen towns under water, evacuation centres have been hastily set up, while military aircraft were on standby to help with evacuations.

Flood warnings have also been issued for parts of the Northern Territory while in the west of the country, oil and gas producers have been forced to suspend production by gale force winds brought by a brewing tropical cyclone.-Reuters