Footage shared to social media showed repeated lightning strikes illuminating the night sky as the twister brought down power lines and trees on Thursday night at 11pm.
Locals described hail the size of the Australian $2 coin right through to golf balls as the ice smashed into properties and on vehicles.
There have also been reports of cars flipped or damaged by falling trees and rooves ripped off houses across the town.
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The NSW State Emergency Service (SES) received 111 calls for help in the aftermath of the storm with some terrified families trapped in their homes.
The SES responded to a total of 450 calls for assistance across the state.
Earlier in the afternoon, the supercell storm marched across the Blue Mountains and into Sydney with tornado signatures on weather radars.
Western Sydney lawns were blanketed with ice after suburbs were hit with five centimetre hailstones around 3pm.
Hail the size of golf balls battered parts of New South Wales on Thursday afternoon. Picture: Facebook
Front yards across western Sydney was blanketed with hail. Picture: Supplied
Mt Druitt Westfield shopping centre was forced to evacuate after parts of the ceiling collapsed onto shoppers.
Locals fled after the roof inside the Best and Less store and near Woolworths fell down, bringing with it a deluge of water and hail.
“The rain water seemed to have pooled above the store and the ceiling collapsed,” a spokesperson said.
“Everyone inside has been evacuated and there were no injuries.
“But they are still investigating, including whether other stores might be at risk.”
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NSW Fire and Rescue arrived at the scene at 4pm to stabilise the roof and assess the damage.
Parts of the Mt Druitt Westfield carpark has been closed after awning that protects cars was ripped from its hinges.
Parts of the centre will remain closed on Friday due to storm damage.
Firefighters also came to the rescue of at least three drivers who needed rescuing from floodwaters in Merrylands.
A severe thunderstorm warning was issued for parts of New South Wales on Thursday afternoon with residents told to brace for tornadoes, destructive winds, giant hailstones and heavy rainfall.
Streets covered in hail in Rooty Hill. Picture: Jonathan Ng
Storm rolls across Sydney on Thursday afternoon around 3pm with residents taking to social media to share images. Picture: Twitter
Sky News Australia meteorologist Rob Sharpe says it is “pretty rare” to see a tornado warning for Sydney.
“A particularly nasty storm formed here around Penrith – a supercell thunderstorm that has been tracking eastwards and south-eastwards … through Sydney,” he said on Thursday afternoon. 
“We’ve got a lot of hail forming with this, greater than five centimetres in diameter, so giant hail and right in the middle of it there is potential for a tornado.
“We may seen a  tornado, the storm looks … to be easing slightly back so that risk of a tornado in the future is reducing.” 
Western Sydney residents took to social media to share footage and photos of their streets resembling a snowfield and kids playing with the hail.

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