Hundreds of Gore residents evacuated early this morning are being allowed to return home tonight after major flooding in the Southland area.
The residents were told to leave their houses at about 6am this morning, as the Mataura River threatened to breach its flood defences.
Civil Defence says Mataura residents may also be allowed to return tonight, but Wyndham residents are likely to stay evacuated until tomorrow as the last surge of water is still going through there.
Residents were being told to evacuate from low-lying areas of Gore, Mataura and Wyndham earlier today.
Emergency Management Southland controller Angus McKay said the evacuation plans seemed to be going well, but there was a lot more assessment needed in the rural areas.
"Gore did an amazing job, they evacuated earlier this morning. It looks like we dodged a bullet there, the river defences have held pretty much so we're hoping later on this afternoon once we've done an inspection we're looking promising for letting people back into Gore.
"Mataura we're really on a watch and wait, and the same for Wyndham which is a bit further downstream.
"They're our kind of urban areas, it's fair to say we've got a lot of water in the rural areas. We've really got a few days ahead of us to assess all the damage around the rural areas and how we can help people deal with that."
River levels were expected to peak in Wyndham about 3.20pm. The Mataura River, which flows through the Southland town of 550 residents, was expected to peak about 5.50pm.
Everybody has been ordered to leave and head for the Mokoreta or Mimihau Halls, which are serving as evacuation centres.
People have been asked to take enough belongings to last them for a number of days, as it may be some time before they are able to return.
Widespread highway closures were in place in Otago and Southland due to the flooding
The Transport Agency said State Highway 1 from Clinton to Gore and from Mataura to Gore is closed.
State Highway 6 from Frankton to Kingston and from Kingston to Lumsden was also closed, as was State Highway 90 from McNab to Tapanui
Over at the Makarewa Junction on State Highway 6, the road was closed on the Makarewa River Bridge.
State Highway 93 and 94 are also shut from Clinton, Gore, The Key, Te Anau and Milford.
State Highway 96, 97 and 99 from Winton, Mossburn and Wallacetown was also shut.
The government has declared the flooding in Southland and Otago to be an adverse event, opening the way for extra support to be offered to farmers and growers.
It has made $100,000 available through Rural Support Trusts to speed up recovery and provide technical advice.
Agriculture Minister Damien O'Connor said this was initial funding and more money may be available as the full extent of the damage to farms was revealed over the coming days.
Dairy NZ said more than 100 dairy farms are severely impacted by the flooding, with many in a dire situation.
Dairy NZ South Island manager Tony Finch said the farms were either underwater or cut off with no road access.
Mr Finch said farmers and their teams were moving cows to higher ground.
Dairy farms in the Oreti, Aparima and Clutha river catchments were the most severely impacted, with many areas also without power.
He said tankers can not collect milk, so farmers were having to dispose of it.
Mr Finch said this was a challenge when the effluent management systems on many farms had also been affected by the flooding.
Some of the tourists rescued yesterday described a narrow escape with just two minor injuries after a slip swept into the wall of their hut, crushing bunk beds and a completely destroying a block of five toilets.
Hundreds more people trapped by flooding and slips in Milford Sound overnight were being evacuated by helicopters to Te Anau this morning.
Meanwhile, O'Connor said the government is going to speak with Environment Southland cleaning up toxic chemicals from the disused paper mill in Mataura.
An old paper mill storing a hazardous substance - ouvea premix - is in the flood zone in Southland, where severe weather has flooded the Mataura River.
When saturated with water, the substance being stored in the mill creates ammonia gas - a pungent, colourless gas that is toxic to humans and the environment.
Invercargill mayor Tim Shadbolt said the local councils had been working for years to reduce the risk.
"There has been a movement of some fo the dross out of the area but it's a large amount that's being stored at the paper mill and to tackle that is going to require a huge commitment from government as well as local authorities."
A Mataura resident said a large number of locals were calling on the council to remove the toxic waste the day before the flood waters hit.
Local resident Gem Burr said the chemical should not have been left in the mill.
She said yesterday many locals commented on the council's social media pages calling for the waste to be moved, but all the comments were ignored.
Another resident Warren Gaudion said the old paper mill which is being used to store toxic waste was known to flood.
Gaudion said he worked in the old paper mill for years, and over the years saw several floods through the building.
He said when the river rises it hits a bottle neck and goes through the building and was one of the reasons why the mill was ultimately closed down.
He said it was Tiwai Smelter's by-product and he believed they should deal with it.
Canterbury environmental chemist Sally Gaw said exposure to major toxins stored in the paper mill could be fatal.
She said exposure to ammonia gas can damage the skin, lungs and eyes and, in severe cases, cause death.
She said if the storage site floods, the area will need to be evacuated and all potentially exposed people will need to be checked by a doctor.
Professor Gaw said there could be impacts on the Mataura River including toxicity to aquatic organisms and livestock. The ammonium could also trigger the growth of algal blooms.
"The aluminium hydroxide would be in the form of fine particles which would increase the particle loading in the river and may clog fish gills and smother organisms living on the riverbed."