Hurricane Ike ravaged the densely populated Texas Gulf coast today drowning thousands of homes under a wall of water, halting a fifth of US oil production and paralysing the country’s fourth biggest city.

Ike charged ashore at the barrier island city of Galveston as a strong Category 2 storm at 7.10am GMT (2:10am locally) with 110 mph (175 kph) winds, the National Hurricane Centre said.

It flooded Galveston and submerged a 17-foot (5-metre) sea wall built to protect the city after a 1900 hurricane killed at least 8,000 people.

With thousands of residents having ignored orders to evacuate their homes, rescue services are bracing themselves for a mammoth operation ahead.

Almost half of Galveston’s 60,000 residents stayed put. Grandmother Sherry Gill spent the night in League City, roughly halfway between Galveston and Houston huddling with her family as the wind howled over her shuttered home.

“It was a night of sheer terror. I thought the roof was going to lift off,” she said.

About 50 miles (80 km) inland, Ike lashed downtown Houston’s skyscrapers, blowing out windows and sending debris flying through water-logged streets. Downed trees and power lines and rising waters left many streets impassable.

Around 4.5 million Houston residents woke to find they had lost electricity supplies. The city was dark except for the downtown area and the Texas Medical Centre, which are fed by underground power sources.

Both of the former Enron towers, now occupied by Chevron Corp, were peppered with broken windows. There were also reports that the 75-storey Chase Tower has numerous windows broken.

“We expected a major storm and our expectations unfortunately came true,” said Mark Miner, a spokesman for Texas Governor Rick Perry.

“The weather needs to clear up a little bit to see just what the devastation was.”

In Galveston, emergency officials were sending patrols onto water-logged streets to begin assessing damage.

“We do have reports of damage but we’re just now to the point where it is safe for our units to get out and start making assessments,” said Lee Lockwood, Galveston County Emergency Management operations manager.

By 13.00 GMT (8am locally), Hurricane Ike, was downgraded to a category 1 hurricane and was around 20 miles south-southeast of Huntsville, Texas, with sustained winds of nearly 90mph.

A spokesman for the US National Hurricane Centre said Ike was expected to travel through eastern Texas during the afternoon and hit western Arkansas by nightfall.

"This is a huge storm that is causing a lot of damage, not only in Texas, but also in parts of Louisiana," U.S. President George W. Bush said this morning after decaring a federal emergency in Texas.

“The storm has yet to pass and I know there are people concerned about their lives. Some people didn’t evacuate when asked,” said Bush, who, though born in Connecticut, considers Texas his adopted home state.

Speaking from the White House, he said US Homeland Security Secretary Michael Chertoff will travel to Texas today, weather permitting.

The hurricane has shut down 17 oil refineries on the Gulf of Mexico, the heart of the U.S. oil sector where 22 percent of fuel supplies are processed. Energy experts said it would take at least a week for the refineries to get back to normal. President Bush said that the government would monitor fuel prices to discourage profiteering by suppliers.

The US Environmental Protection Agency has waived federal clean air regulations for petrol sold in states affected by the storm, in an effort to reduce fuel disruption.

Ike was the biggest storm to hit a U.S. city since Hurricane Katrina devastated New Orleans in 2005.

Earlier, the storm caused devastation in Cuba and Haiti, where hundreds of people have died in several tropical storms over the last month.

The Haitian Prime Minister, Michele Pierre-Louis, believes one million people may be homeless, and has called for international help. The UN says more than $100m is needed.

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