The levee height was exceeded mid-morning on Wednesday as the Wilson River peaked over 10.65m and flood waters and mud began to spill into the CBD again, the Bureau of Meteorology said.
Mayor Steve Krieg told AAP he had heard reports the river had begun to tip over the top of the levee shortly before the confirmation.
"Everyone's exhausted," he said.
"Evacuation orders started at four o'clock yesterday afternoon and then got cancelled before the phones started ringing again.
"(People are) running on no sleep at the moment.
"It's hard to put into words. You're feeling angry as well because the messaging hasn't been what it should have been."
Mr Krieg said frustration in Lismore had grown after an evacuation order was cancelled half an hour after being issued on Tuesday.
The order to evacuate was then re-issued late Tuesday night, with the Wilson expected to burst its levee on Wednesday, peaking over major flood levels of 10.6 metres, up to 11 metres and higher, BoM said.
The worst might still be to come, with even higher readings at Lismore possible on Wednesday afternoon.
Like many Lismore locals, Mr Krieg has been sleeping at a friend's home for the past month and says he will be bunking with others for months to come.
He says the silver lining about the renewed flooding is most people lost the bulk of their valuables in the first inundation.
"The hardest thing for these people is they have spent weeks and weeks cleaning and getting rid of all the flood mud, sanitising and addressing the mould issue.
"Now you've got to virtually start all of that process from the start again."
City centre residents along with those in surrounding Lismore Basin, East Lismore and Girards Hill were urged early Wednesday to leave immediately.
Byron, the owner of a petrol station in Murwillumbah, said his business had been flooded in the most recent catastrophic event in the Northern Rivers.
"It came up to like two metres (high) in the shop and we've lost everything," he told the Nine Network.
The recent floods had broken the business' petrol pumps, ovens and fridges which had all since been replaced.
Flash flooding in the CBD has again inundated roads and an evacuation centre has been set up at Southern Cross University.
Further south, heavy falls and thunderstorms which could lead to flash floods with the possibility of dangerous and life-threatening conditions is forecast for parts of the Mid North Coast and Northern Tablelands.
Six evacuation orders are in place across NSW for areas including the Lismore CBD, Lismore Basin, low-lying areas of East Lismore, North Lismore and Girards Hill, Riverside Caravan Park Coraki, Tumbulgum, low-lying parts of Kyogle, parts of South Lismore, and Bellinger River Tourist Park on the north coast.
Six-hour rainfall totals between 80mm and 140mm are possible, while up to 300mm may fall over mountainous coastal areas.
Locations in the warning zone include Grafton, Coffs Harbour, Port Macquarie, Taree and Dorrigo.