The flood surge is expected to peak in Brisbane, a riverine city of two million people, before sunrise on Thursday and last for days. However, the peak will arrive within the next few hours in Ipswich, a satellite town to the west.
"The water is rising and swallowing up the city. It's really heartbreaking," said Ipswich Mayor Paul Pisasale.
Brisbane residents on Wednesday pushed food-laden shopping carts through drowned streets, others waded in shoulder-high water to rescue possessions, while boats and pontoons were ripped from moorings in the Brisbane River and smashed into bridges as the muddy brown tide gathered strength.
At flooded intersections people paddled surfboards through floodwaters, balancing their possessions on the deck of the boards, while boats ferried evacuees to dry ground.
"I am feeling a sense of horror and awe at the power of the river. Sadly in coming hours we will see bits of people's homes float down the river," Brisbane mayor Campbell Newman said, warning the torrent could take three to four days to subside.
Rescue crews took advantage of some rare sunshine to look for 67 people still missing from tsunami-like flash floods that tore through townships west of the city this week.
"We can take no comfort from that blue sky," Queensland state Premier Anna Bligh told reporters, predicting almost 20,000 homes could be flooded at the river's peak in what she called Queensland's worst natural disaster.
"The water and the rain have already done their damage. This is a deeply serious natural disaster."
The worsening floods are forcing economists to raise estimates of the economic impact, with one central bank board member on Wednesday saying the disaster could cut 1% off growth -- equal to almost $13 billion, double the previous highest estimate.
The Australian dollar sank to a fresh four-week low of $0.9803 on the comments from Warwick McKibbin, an academic and a member of the central bank's policymaking board.
Treasurer Wayne Swan in November forecast GDP growth of 3.25% in fiscal 2010-11, up from a 3.0% projection, but said spending would be cut to ensure a surplus of A$3.1 billion or 0.2% of GDP in 2012/13.
Food prices are surging around the country as the floods ruin Queensland crops and distribution networks.
Prices for tomatoes have leapt about 200% in two weeks, while beef is up 11% and wheat has risen 4% in four months.
Brisbane a deserted city
In Brisbane, thousands of homes and businesses were deserted as swirling floodwaters rose in and around the city, forcing residents to flee with few possessions to higher ground and to evacuation centres crowded with more than 3,500 people.
Some of the scenes in the city were surreal, with early-morning joggers trying to carry on as normal, even though parts of their routes were underwater.
Others were distraught.
"This is my whole life, everything is gone. I never thought it would get this bad," said Kim Hung, manager of the Salt 'n' Pepper catering business, as two friends floated a coffee machine toward higher ground.
Raw sewage began spilling into the river and creeks, prompting authorities to warn of a heightened disease risk as damaged water treatment works polluted the floodwaters.
Bligh said she expected about 19,700 homes to be flooded at the river's peak, affecting up to 45,000 people. The military is running relief flights with helicopters and C-130 transports.
Dams built to protect Brisbane and outlying towns were spilling floodwaters into swollen rivers.
The Port of Brisbane was closed, shutting down Australia's third-busiest container port and a 5-million-tonnes-a-year coal-loading facility.
Australia is the world's biggest exporter of coking coal, which is used in steel manufacturing and accounts for more than half of global exports, and is also the second-biggest exporter of thermal coal used for power generation.
Power company Energex shut power to some low-lying areas of Brisbane, including parts of the financial district, for fear that live power lines could electrify floodwaters. Some 78,000 homes in the southeast of Queensland were without electricity.
Queensland Premier Bligh advised people not to leave their homes if they are safe and to conserve water in case fresh supplies were interrupted.
"As crazy as it sounds, now is not a time to be wasting water," she said.
Prime Minister Julia Gillard arrived in Brisbane to inspect the devastation and said she was deeply concerned about the impact on jobs and livelihoods.
"I have been shocked. I think we've all been shocked by the images of that wall of water just wreaking such devastation. The dimensions of it are truly mind-boggling," Gillard said.
The floods have been blamed on a La Nina weather pattern in the Pacific, with Australia recording its third-wettest year on record in 2010, with two wet-season months to go.
Weather officials are also forecasting an above-average cyclone season.
As the Queensland floods and rains move south, major rivers in New South Wales state have begun flooding or threatening to break their banks, forcing rural evacuations.
In southeast Victoria state, heavy rain caused flash flooding and landslides, prompting fears a lake near Horsham could break its banks.
However, underlining the country's summer of extremes, authorities in Western Australia battled huge bushfires.