HUNDREDS were feared dead last night, tens of thousands were homeless and flood waters submerged most of New Orleans after much of the US Gulf Coast was destroyed by Hurricane Katrina, predicted to become the costliest storm to have hit the US.

As President Bush declared major disaster areas in Mississippi, Louisiana and Alabama, low-lying New Orleans faced catastrophic destruction, with floodwaters pouring into the city through levees breached by the storm.

More than 80 per cent of the city was submerged last night, with the mayor talking of seeing bodies floating in the streets while the authorities declared martial law.

Kathleen Blanco, the Governor of Louisiana, said last night that thousands of people had been rescued from the rooftops of New Orleans, and state officials were planning to move to safety the estimated 55,000 people still trapped in the Superdome and other shelters.

“The communications network is completely gone,” Ms Blanco said. “We think there may be only one major way into the city right now.”

Lousiana State University Medical Centre, one of the city’s main hospitals, was “out of commission”, she said.

“The first goal is to bring enough supplies in to sustain those folks until we can develop a network to get them out,” Ms Blanco told a news conference. “There’s no power. It’s difficult to get food to them. There’s water lapping at the foot of the Superdome now.”

The death toll in just one Mississippi county rose above 100 when a massive surge of seawater swept through the coastal town of Biloxi. Officials said the final number of dead might reach 300.

More than 30 were killed when a beachside apartment was destroyed, while the town’s Grand Casino was swept across the US 90 highway. The Mayor of Biloxi, A. J. Holloway, said: “This is our tsunami.”

Between Gulfport and Biloxi, streets and homes were flooded six miles inland. Thousands of devastated homes and communities remained cut off from the rescue workers, who spent the day using axes and even shotguns to smash their way into attics to pull terrified residents to safety.

Officials said that hundreds of people were missing, and predicted that the death toll could climb quickly. “The devastation down there is just enormous,” Haley Barbour, the Governor of Mississippi, said.

“We know there is a lot of coast that we have not been able to get to. It looks like it is a very bad disaster in terms of human life.”

The American Red Cross said that it was starting the largest relief operation in its history, as across the Gulf Coast, hit by Katrina and its 150mph winds on Monday morning, people clung to rooftops, while thousands of trees lay uprooted and cars and sailboats sat crumpled, having been tossed about like toys.

There were two deaths confirmed in Alabama. In Mobile, where much of the business district lay submerged, an offshore oil drilling rig was ripped from its mooring and sat embedded in a road bridge.

Marty Evans, the American Red Cross president, said that 75,000 people were being housed in nearly 240 shelters across the region.

More than 1.3 million people in Mississippi, Louisiana and Alabama were without power. The authorities said that it could be two months before electricity is restored to everyone who had been hit.

Estimates by insurers put the property and casualty costs of Katrina at anything up to $26 billion (£15 billion), which would make it more expensive than the previous record storm, Hurricane Andrew, which caused $21 billion in insured losses in 1992.

The White House said that Mr Bush would cut short his summer holiday by three days and return to Washington from his Texas ranch today to help to monitor the efforts to assist Katrina’s victims.

“This morning, our hearts and prayers are with our fellow citizens along the Gulf Coast,” Mr Bush said. “We know that many are anxious to return to their homes. It’s not possible at this moment. We have a lot of work to do.”

Thad Cochran, Republican chairman of the Senate Appropriations Committee, which will oversee the disbursement of relief funds, said: “This is going to be the most expensive natural disaster that’s hit the United States in history. We’re going to do whatever is needed to help the people and local governments recover from this catastrophic event.”

The Pentagon activated thousands of National Guardsmen in Louisiana, Mississippi and Alabama, and dispatched emergency co-ordinators to provide communications equipment, search and rescue operations and medical teams.

In Biloxi, Harvey Jackson described the harrowing moment when he lost grip of his wife, whom he now fears dead.

With his house splitting in two, and floodwaters rising, Mr Jackson said: “I held her hand as tight as I could. She told me, ‘You can’t hold me.’ She told me to take care of the kids and grandkids . . . we ain’t got nowhere to go. I’m lost. That’s all I had.”

HOW IT HAPPENED

MONDAY

6.10am (local time) Hurricane Katrina comes ashore as a Category 4 storm at the Louisiana bayou town of Buras

7.40am Most of the windows on the north side of the New Orleans Hyatt are blown out 2pm Many eastern districts of New Orleans reported to have been flooded under six feet of water. Local television stations show footage of looting

10pm Search and rescue operation boats launched 11pm Mayor Ray Nagin tells WWL-TV: “Our city is in a state of devastation. It’s almost like a nightmare that I hope we wake up from”

TUESDAY

1:30am A levee on the 17th Street Canal, which connects into Lake Pontchartrain, has a breach as wide as two city blocks

10.27am Governor Kathleen Blanco says that her office expects the loss of life to be high

10.30am New Orleans is under martial law

10.45am The Coast Guard closes all ports and waterways into New Orleans

11.04am New Orleans police say that looting is out of control

11.50am President Bush cuts short his holiday by two days to monitor the rescue operation

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