Residents in Gore and Mataura are being warned they may need to flee the area in a hurry with potential flooding on the way.
"River levels, particularly the Mataura, are high and continue to rise," Emergency Management Southland wrote on its Facebook page on Tuesday evening.
"Modelling of river levels suggests that the stop banks will contain the expected flood peak at about noon on Wednesday, but people should be prepared."
Residents were urged to prepare a "grab bag" in the event they were asked to evacuate at short notice.
"A grab bag should contain medications, personal items and clothing."
Anyone needing to evacuate would be advised by the council and emergency staff, Emergency Management Southland said.
Schools in Gore have been closed for the day and Emergency Management Southland controller Angus McKay said people should avoid unnecessary travel.
On Tuesday, Civil Defence declared a state of emergency in the Southland region. That followed the declaration of a state of emergency in Fiordland on Monday.
Farmers are being urged to move livestock and sandbags were put down overnight.
A welfare centre has been set up at Calvin Community Church.
Meanwhile, Southland Mayor Gary Tong says there will be a huge cleanup effort required in Milford and Te Anau.
"I understand the area of Kingston and Athol and Garston as being pretty well washed out that way as well," Tong told Newshub.
Almost 200 tourists stranded in Milford are expected to be airlifted out early on Wednesday.
They have been stuck since torrential rain washed out part of State Highway 94.
"Everyone in Milford is in good heart and I know those ones that have been lifted out obviously are in a better place than they were, so I think the spirits are right up there," says Tong.
According to The NZ Transport Agency, SH94 between Cascade Creek and Milford Sound could remain closed until early next week.
Tong says emergency crews worked hard on Tuesday to evacuate trampers stuck in huts in Fiordland.
"The ones on the track that we know of have been airlifted out. [We're] pretty confident that everyone is out of the affected areas in the Hollyford and down into Martins Bay area."
On Monday, MetService issued its first-ever 'red warning' as the South Island was slammed by heavy rains.
The warning is reserved for the "most extreme weather events" where "significant impact and disruption" is expected.