The Murrumbidgee river is predicted to peak at 10.9 m, sparking fears that the town’s levee may be breached.
Police, the military and the emergency services were all helping with the evacuation, local media said.
Days of heavy rain have caused flooding across three Australian states and left at least two people dead.
Parts of Queensland and Victoria are also affected.
On Tuesday, emergency personnel and officials in Wagga Wagga said they were ”monitoring” the rising water and the levee.
Prime Minister Julia Gillard told reporters that military resources have been deployed and are standing by to render aid if necessary.
“We’ve got floodwaters across New South Wales, Queensland and Victoria,” she said.
“For the people of Wagga particularly, this is a very anxious time.”
Police have gone door-to-door in the town to encourage people to leave.
“Should the levee fail and the water enters the CBD and other areas in Wagga Wagga, then people need to be in the evacuation centre, not in their homes or businesses,” said State Emergency Services deputy commissioner Dieter Geske.
There was no panic though and the scene was one of ”calm and reasoned emergency”, said Michael McCormack, the local MP.
“Down in the central business district of Wagga Wagga it resembles a scene from Escape from New York,” Michael McCormack told ABC News.
“There are cars coming in, there are cars coming out.”
Two men have been killed since the weekend, both swept away in their cars.
The first man was swept downstream over the weekend at Araluen in southern New South Wales as he tried to drive through the flood. His two companions were rescued.
On Monday a man died when his car was washed off a road in the town of Glenwood, near Gympie in southeast Queensland.
Authorities have cautioned people against trying to drive through floodwater.
Just last month thousands were evacuated in Queensland, which experienced its third major flood in less than two years. Parts of New South Wales were also cut off by severe flooding.
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