A few cells have developed over central parts of NSW mainly on the ranges so far. The soundings this morning suggest good potential for hailstorms with the dry air aloft and nice lapse rates.
EDIT - BoM have just issued a STW:
SEVERE THUNDERSTORM WARNING
for LARGE HAILSTONES and DAMAGING WIND
For people in the ILLAWARRA, CENTRAL TABLELANDS and parts of the HUNTER, SOUTHERN TABLELANDS and CENTRAL WEST SLOPES Forecast Districts.
Issued at 2:13 pm Tuesday, 26 February 2008.
Severe thunderstorms are likely to produce large hailstones and damaging winds in the warning area over the next several hours. Locations which may be affected include Nowra, Orange, Mudgee, Bathurst, Katoomba and Goulburn.