'Tornado' reportedly damages at least seven homes in Victorian town

A tornado has reportedly torn through a small Victorian town, severely damaging at least seven homes.

Local newspaper The Strathmerton Standard posted several photos on their Facebook page of damaged houses on Denison Street, Strathmerton, and said a tornado had ripped ten roofs from homes in the small town, located on the border of Victoria and New South Wales.

The SES said at least seven homes had been severely damaged in the region, north of Shepparton, after the storm struck around 3pm.

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Photos showed roofs caved in and trees ripped from the ground, with debris strewn across driveways.

Earlier this afternoon the Bureau of Meteorology issued severe thunderstorm warnings for both NSW and Victoria and said rain, hail and lightning was expected to lash the states.

A large part of central NSW, including Orange, Katoomba, Penrith, Walgett, Dubbo, Parkes, Wagga Wagga, Albury, Griffith, Hay, Cobar, Bourke, the Illawarra and Lightning Ridge were identified as warning areas.

There have been reports of hail in Sydney suburbs, including Balmain, as well.

Wind gusts reaching speeds of 217 kilometres/hour were recorded at Hay at around 2pm.

The BoM said Victorian residents in the north east, west and south Gippsland areas and parts of the central and east Gippsland districts would also be subject to destructive winds, heavy rainfall and hailstones.

An earlier severe storm warning issued for Melbourne was cancelled around 4pm.