The incidence of major storm surges in the last decade have dramatically emphasized the immense destructive capabilities of extreme water level events, particularly when driven by severe tropical cyclones. Given this risk, it is vitally important that the exceedance probabilities of extreme water levels are accurately evaluated to inform risk-based flood and erosion management, engineering and for future land-use planning and to ensure the risk of catastrophic structural failures due to under-design or expensive wastes due to over-design are minimised. Australia has a long history of coastal flooding from tropical cyclones. Using a novel integration of two modeling techniques, this paper provides the first estimates of present day extreme water level exceedance probabilities around the whole coastline of Australia, and the first estimates that combine the influence of astronomical tides, storm surges generated by both extra-tropical and tropical cyclones, and seasonal and inter-annual variations in mean sea level. Initially, an analysis of tide gauge records has been used to assess the characteristics of tropical cyclone-induced surges around Australia. However, given the dearth (temporal and spatial) of information around much of the coastline, and therefore the inability of these gauge records to adequately describe the regional climatology, an observationally based stochastic tropical cyclone model has been developed to synthetically extend the tropical cyclone record to 10,000 years. Wind and pressure fields derived for these synthetically generated events have then been used to drive a hydrodynamic model of the Australian continental shelf region with annual maximum water levels extracted to estimate exceedance probabilities around the coastline. To validate this methodology, selected historic storm surge events have been simulated and resultant storm surges compared with gauge records. Tropical cyclone induced exceedance probabilities have been combined with estimates derived from a 61-year water level hindcast described in a companion paper to give a single estimate of present day extreme water level probabilities around the whole coastline of Australia. Results of this work are freely available to coastal engineers, managers and researchers via a web-based tool (www.sealevelrise.info). The described methodology could be applied to other regions of the world, like the US east coast, that are subject to both extra-tropical and tropical cyclones. © 2013 Springer-Verlag Berlin Heidelberg.