The NSW government has declared a natural disaster zone at Lennox Head.
It means the northern NSW coastal town and the wider Ballina and Byron shires will qualify for financial assistance following Thursday's tornado.
Prime Minister Kevin Rudd has offered federal help, if the NSW government makes a formal request for aid.
The money will be used to repair public infrastructure damaged during the incident.
"Two people required hospital treatment but we remain thankful that no one lost their lives or was more seriously injured when this tornado hit Lennox Head coastline yesterday morning," NSW Premier Kristina Keneally said in a statement on Friday.
"The State Emergency Service, Rural Fire Service, NSW Fire Brigades and NSW Police, along with Ballina Shire Council staff and Country Energy crews have made us proud with their efforts."
The northern NSW region has also been affected by torrential rain, causing substantial flooding to some areas.
Emergency services minister Steve Whan warned that more flooding could occur in the coming days and urged residents to stock up on food and medical supplies.
State Emergency Service (SES) workers, council staff and residents on Friday are beginning the long task of clearing debris from the tornado-hit town.
SES commissioner Murray Kear says he expects further calls for help from residents throughout the day.
There are also warnings that some of the damage to properties may have exposed asbestos.
The tornado that tore through Lennox Head about 7.30am (AEST) on Thursday sprang out of a line of water spouts that formed over the ocean, tearing roofs off homes, smashing windows and overturning caravans.
It came on top of a series of storms and torrential downpours which soaked the state's north, causing substantial flooding to some regions.
Commissioner Kear said the SES had responded to 270 calls since the spate of foul weather began; 108 of those calls were in Lennox Head.
"It is incredible; it's just like a war zone in some of the areas I've walked through last night and early this morning," he told Seven Network on Friday morning.
"The calls are about 76 per cent complete. We expect that some more calls will come in through the day as people find more water inundation into their homes but this morning we'll start the clear up process and evaluating the damage."
