Water began pouring from the manhole in Boughey Road, at about 2pm, covering the road and pavement between the junctions of Ford Road and Heathwood Road.
Telford & Wrekin Council have attended to block the road while the issue is resolved.
Town mayor Peter Scott said that if drivers did attempt to get through there was a risk of becoming stranded.
A spokesman for Severn Trent said the overspill from the manhole was caused by "hydraulic overload", as a result of the heavy rain in recent days.
He said: “We’d like to apologise for the issues in Newport which have been caused by the heavy rain in the area overloading our sewer network. The water should drain away relatively quickly and things will start to get back to normal once that happens.”