The small village of Balmoral in the Southern Highlands has been all but wiped out by the Green Wattle Creek firestorm that roared through the area twice in three days.
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The community was already reeling after being hit on Thursday when the flames returned on Saturday as the state faced catastrophic fire danger.
"We've got the devastating news there's not much left in the town of Balmoral," Premier Gladys Berejiklian said in nearby Picton on Sunday.
"Very sad to hear that. Many residents have had that news in the last little while. Communities like Buxton and others have also been very hard hit."
The premier said some residents would be allowed to return to their properties "today or tomorrow" but others could have to wait longer.
Assessment teams are going in to determine when it will be safe for people to go home.
"If people have lost their properties they still want to go back to see what's left and if there is anything they can salvage," Ms Berejiklian said.
"We know that's part of the recovery. We want people to have access to their land as soon as they can but it has to be safe."
The Liberal leader said the devastation was "shocking".
Balmoral, in the Wingecarribee Shire Council area, consists of about 150 houses with a population of some 400 people.
Matthew Deeth - who's the mayor of the neighbouring Wollondilly Shire Council - says everyone knows everyone in the small village.
"They were all banding together until they got hit yesterday and they were just decimated," Mr Deeth told AAP on Sunday.
"Most people were pulled out of their houses and if there was nobody defending houses they kind of just all lit up."
Mr Deeth has friends in Balmoral whose home was slightly damaged "and it's about one of a handful of houses still standing".
The mayor said he was in the local RFS shed that was sheltering people during Saturday's inferno and "they're just absolutely gutted - the shock on their faces".
The federal and state governments have extended emergency relief funding to the Wingecarribee and Wollondilly council areas.
A dozen councils areas across NSW now have access to more than $60 million in joint funding, Ms Berejiklian said on Sunday.
"We're not just here today and tomorrow. We'll be with you in the weeks and months and - in some communities - years during the rebuilding process."
NSW Rural Fire Service commissioner Shane Fitzsimmons earlier said "dozens" of homes may have been lost when bushfires raged across NSW on Saturday.
The areas hardest hit include Lithgow and along the Bells Line of Road in the upper Blue Mountains, and the Wollondilly Shire villages of Buxton, Balmoral and Bargo which were ravaged for the second time in three days.
The Currawong blaze north of Batemans Bay also raced through communities near Nerriga on Saturday, Mr Fitzsimmon said.
"We are expecting another heavy toll unfortunately with estimates that property loss could be in the dozens of buildings including homes, outbuildings, sheds and businesses," he said.
Fire and Rescue NSW duty commander Inspector Kernin Lambert said the Green Wattle Creek fire was deadly on Thursday.
"Around the Balmoral village, we had two fire fronts come together and they merged," he told ABC TV at the time.
"We were experiencing firestorm-type conditions."
Volunteer RFS firefighters Geoffrey Keaton, 32, and Andrew O'Dwyer, 36, died later on Thursday night when a tree fell into the path of their tanker in neighbouring Buxton.
Australian Associated Press
