Kiama council crews attending to Jamberoo Mountain Rd problems had heard the earth moving beneath the road, the council's engineering director said.
The road will be closed for several weeks after heavy rain on Monday night caused about 1m of the road to give away, uphill from The Abbey.
Engineering crews have been inspecting damage and testing the ground and this would continue when the area dried out, Kiama Municipal Council engineering director Mike Dowd said.
"This was just an unprecedented very big event," he said. "There's a potential there was probably 1m of water washing over that road. It could have come and gone within minutes and nothing could have withstood it."
Mr Dowd said this was a stretch of road which had caused problems before, and to fix it properly will require significant effort, money and time - it could take six months or more.
"This was a major slip that's compromised the whole road structure," he said.
"We've got to go back and do a full design, full investigation, try and fix this once and for all. It's big money."
This stretch of road was notoriously shifty.
"It's an unstable area - the earth moves, the tree moves," Mr Dowd said. "If you go up there at night, as many of our crews do, to try and clear trees in the past, they'll tell stories [how] they'll be standing on the road and all they're hearing is creaking, and movement, and shuffling - everything's just moving around because the soil is so sodden.
"Fortunately it happened a night when there was no-one near it, and we discovered it in the morning."
It's likely to take several weeks before one lane is able to be opened again. In the meantime drivers should use Macquarie Pass.