Sydneysiders are being warned that a huge dust cloud will continue to affect the city through the day, after they woke to an eerie red dawn this morning.

The huge dust storm which has settled over the city and much of New South Wales was carried east overnight by gale-force winds of up to 100kph.

This morning the weather bureau said the dust cloud was expected to hang around until late afternoon.

Senior forecaster Barry Hanstrum says more high winds are on the way and could cause more damage.

"The winds won't drop off until later today and when they do we think that the dust haze will start to clear," he said.

"The weather system that generated the dust yesterday is associated with gale force winds and the area which is most likely to be affected today is the Wollongong-Greater Sydney region and the Hunter Valley-Newcastle area.

"The winds at times during the morning will average 65kph, which is gale force, with some stronger squally gusts up to about 90-100kph."

The dust reduced visibility across the city and large parts of the state, with callers to ABC Radio saying the scene looked like something from the end of the world.

The bureau has issued a severe weather warning for damaging winds in Sydney and other parts of NSW, with a gale warning issued for Sydney closed waters.

Environmental Health director Dr Wayne Smith says people in poor health, especially those with asthma and heart and lung disease should remain indoors.

He says children with health problems, as well as older adults and pregnant women, should also take precautions and people should avoid heavy exercise.

'Like Armageddon'

Karen from Dulwich Hill, in Sydney's inner west, says she woke up to find the red dust had covered her floors and birds had been blown out of their nests.

"It did feel like Armageddon because when I was in the kitchen looking out the skylight, there was this red, red glow coming through," she said.

Mick told ABC Online: "In Sydney's south-western suburbs I've just woken up to a glowing red window! Thought it was Armageddon! Either that or South Korea [sic] had nuked us!"

Another ABC Online contributor wrote in: "Red. Dusty. Making hard to breath... There are baby birds dead in our backyard. And our cat's gone missing."

Another listener says her lakeside vista has been replaced by a desert view. Others have commented on how birds are struggling to cope with the haze, with some "falling out of the sky".

Another said: "I went out for a ride on my bicycle and I ended up looking like a red panda."

Caller Mary spoke about a dust storm she saw in 1939: "I was 13 years of age and I lived in Leichhardt," she said. "I remember I walked to my aunt's place and you couldn't see your hand in front of your face. The colour was a sort of yellowy-brown."

Schools open

Meanwhile, schools are still open and parents are being told to send their children to school unless they have asthma or other breathing problems.

Sydney Ferries cancelled its services earlier but they are now set to resume. Flights into Sydney have been diverted to Brisbane and Melbourne. Departing flights are delayed.

Steve, who is driving to Tamworth, says rain is making conditions even more treacherous.

"It's almost raining mud," he told ABC Local Radio. "I have a green car and it's now an orange car. The wipers are barely able to cope with all the mud."

Calls for help

The dust storm is also creating work for the fire brigade, with a huge amount of false alarms triggered by the dust

Supreintendent Warwick Kidd says crews in Sydney have had more than 500 call-outs this morning.

"This is certainly an extraordinary event for us,' he said.

"The dust actuates in some of the electrical componentry and also some of these alarms are actually particle alarms that go off with the particles inside the smoke.

"The dust simulates smoke so the fire alarm goes off."

The ambulance service has received around 140 calls from people having breathing difficulties because of the dust, since the storms began.

More than 50 calls were made from Sydney, 50 from the state's west, 23 from the north and 12 from southern regions.

The SES had 175 calls for help overnight. Most came from Crookwell, north of Canberra, where hail the size of cricket balls has fallen and roofs have been damaged.

'Pretty widespread'

Bureau of Meteorology spokeswoman Jane Golding said dust had settled on much of the state, including Sydney.

"It's pretty widespread," she said.

"We've had reports of low visibility up out as far up as Moree, Dubbo, Canberra's got some raised dust in the area and Wollongong, so it's very widespread."

Gale force winds of up to 100kph hit the Hunter region before moving through Sydney early this morning.

"Dubbo's still in pretty thick dust. The dust will last a bit but we're also expecting those winds to pick up as well."

Havoc in the Hunter

The storm has also wreaked havoc in the Hunter Valley, where the dusty air reducing visibility to between 100 and 200 metres.

Peter from Branxton says he cannot see past his front gate.

"It looks foggy but it's not fog, if you're going to do a movie about the end of the world you'd do it today," he said.

Lorraine from Broke thought there was a bushfire.

"It's very dusty, visibility is very poor and we have an orange crimson light, it's quite eerie," she said.

Steve from Maitland says he has never seen anything like it.

"Bushfirey-type smoke, but the dust is very pungent... I've just shut the house up," he said.

Yesterday gale force winds whipped up heavy dust storms and powerful electrical storms across parts of New South Wales.

The winds will also reach parts of Victoria, where a flash flooding warning has been issued.