Victoria's State Emergency Service is telling residents in Traralgon to prepare to evacuate as heavy rain continues to fall across much of Gippsland.
Heavy rainfall began on Wednesday night and has continued throughout the day.
The weather bureau has put out a flood warning for the Traralgon creek, which runs through the city as it is expected to rise above four metres overnight.
Anna Larkin of the SES says about 2,000 houses may be affected.
"Either by being isolated or having water on their property, there's only about 70 houses that get water over the floorboards," she said.
Earlier, strong winds in East Gippsland brought down tree debris across powerlines, cutting power to about 5,000 properties east of Lakes Entrance.
Services were restored after two hours.
Farmers are moving their stock to high ground and Emergency control centres have been set up in the Latrobe Valley and South Gippsland.
SES spokesman Stuart Beales says they are starting to receive calls for help with rising river levels in West and South Gippsland.
"SES units in Foster and Moe, Warragul and Morwell have been pretty busy," he said.
Mr Beales says flooding is expected to cause landslides in South Gippsland, in the Macalister catchment near Licola and in the Macalister River catchment.
"We're asking people to plan for flash flooding, riverine flooding and isolation due to road closures," he said.
Traffic has been disrupted on the South Gippsland and Princes Highways by surface water.
Wettest June record set to fall
There has also been persistent rain in Melbourne and Bureau of Meteorology senior forecaster Dean Stewart says there will probably be another 15 millimetres before it finally stops.
He says so far, there has been 83mm of rain in Melbourne this month.
"Eighty-three millimetres makes it the wettest June since 1991, which happened to be our wettest June on record," he said.
He says there was 117mm of rainfall in June 1991.
"So we're already well over half way and we're not even half way through the month so it's shaping up to be obviously a pretty wet June," he said.
Motorists warned about driving through floods
Gippsland police say they will lay criminal charges against anyone driving through flood waters.
Police Superintendent Geoff Newby says emergency services will be busy enough without having to deal with motorists taking risks.
He says the CFA or SES should not have to divert from someone in need to rescue a driver from the roof of a car when they should have stopped at a road closed sign.
"We're saying that's not good enough because that's an intentional act," he said.
© ABC 2013
20:14 EST As the sun set over Melbourne, a thick fog engulfed the city.