Flooding is set to peak in the Murray River at Echuca, where dozens of houses built along the banks have been swallowed up by water.
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Flood walls have so far protected the centre of town from the worst of the disaster after heavy rain set in overnight.
But properties on the so-called wrong side of a levee constructed over the past week to save major infrastructure have started to flood.
"Our house is surrounded by water," resident Julie Golledge told AAP on Monday, when about 20 centimetres of water had already seeped into her garage.
"There are a number of houses that do have water flowing in them because they're lower lying compared to us."
One of those houses belongs to former policeman Nick Dean.
His gas heating and garage have been inundated and now the only way in and out of his home is via boat.
"You can imagine the anger with council who put this levee up and thrown us to the wolves," Mr Dean told 3AW.
"This levees's made it worse because the waters hit back and bounced back (to his home)."
The Murray River surpassed the 1993 flood level at Echuca on Saturday while the Loddon River at Kerang peaked but the threat is yet to pass.
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Floodwaters have only slightly receded and are not expected to noticeably drop for five to seven days, keeping the community isolated.
The Bureau of Meteorology warned on Monday severe storms could hit towns in the state's north, including Echuca and Shepparton, producing heavy rainfall that might cause renewed flooding.
Severe weather warnings were also in place for the Mallee and Wimmera districts down to the Grampians, with the bureau predicting up to 100mm of rain could fall within 24 hours in some areas.
Australian Associated Press
