Government will cover the cost of council tax discounts for flooding victims, David Cameron announced as he pledged to "continue to do whatever it takes" to help stricken communities.
A £4 million fund will be made available to English councils who give residents a rebate while they are out of their homes - enough to cover at least a 3 month bill for everyone affected.
Some local authorities have already announced plans to exempt residents forced out of their homes from part or all of the bill.
The Prime Minister, who visited Pembrokeshire and Somerset as he continued his tour of flood-hit parts of the UK, said : "We will continue to do whatever it takes to support communities across the country who have been affected by flooding.
"We are taking action across the board and in addition to a range of measures that I have already announced to help hardworking people, I have today confirmed that we will make £4 million available to fund council tax rebates for people whose homes have been flooded.
"The process of getting communities back on their feet will take time and people should not have to worry about paying council tax while they focus on the clear-up process."
Somerset County Council is suspending the county council part of the tax for residents affected by the flooding and Aylesbury Vale District Council in south Buckinghamshire said households can apply for a 100% reduction in the fee.
Councils will not be forced to introduce the payment exemptions, but a No 10 source said the "funding is there so there is no reason why it should not be taken".
They added: "We are sure councils will be very eager to do all they can."
A Local Government Association spokesman said: "Many people contending with flood damage to their homes have already been offered council tax rebates by their local authorities.
"Council budgets are stretched and demand for support is high, so it is good news that Government will be supporting local authorities' efforts to provide financial support to flood-hit homes.
"Local authorities are keen to work with Government to ensure the application process is straightforward and that the benefit quickly gets to where it is most needed."
The Prime Minister has been told it will take six weeks to clear the flooding in Somerset and said dredging of rivers on the Levels would start next month.
In a further indication of the ongoing disruption caused by the severe weather, Network Rail said the storm-damaged main line at Dawlish is not likely to be completely repaired until mid-April.
Originally, Network Rail said the stretch of line - an important link between London and the far South West of England - would not be repaired before March 18.
Some 84 flood warnings remained in place across England and Wales alongside the two severe flood warnings - meaning there is a danger to life - on the Somerset Levels.
The Environment Agency (EA) said there is an on-going risk of flooding from the Thames, where several hundred properties have been flooded since January 29.
There was ongoing river flooding on the Thames in Windsor and Maidenhead, Surrey, Buckinghamshire, Wokingham and West Berkshire and the EA said the Thames Barrier would close to hold back the incoming tide.
EA flood risk manager Kate Marks said: "Our thoughts go out to those communities dealing with flooding. Although it is currently an improving picture across most of the country we will continue to see the impacts of flooding for many days to come."