"We are nowhere near out of danger yet," New Orleans Mayor Ray Nagin warned, with an estimated 10,000 residents still in the city after nearly two million people fled coastal areas over the weekend -- an exodus authorities described as the biggest evacuation in US history.

But city officials said the levee system was intact for now, despite still being a work in renewal after floodwaters unleashed by Katrina catastrophically washed away the protective walls.

Fallen tree limbs and downed power lines crisscrossed streets in the Upper Ninth Ward -- ground zero of the 2005 disaster. Wind was ripping siding, gutters and roof tiles from houses.

A convoy of National Guard soldiers rode through flood water in the neighborhood, determined to ferret out any residents seeking to ride out the hurricane despite Nagin's order to flee.

President George W. Bush, taking a more hands-on role after suffering a political pummeling over the botched federal response to Katrina, said: "I feel good about this event."

"The coordination on this storm is a lot better than during Katrina," he said during a visit to Austin, Texas to oversee relief preparations.

But Bush, who had scrapped plans to attend this week's Republican national convention in St Paul, Minnesota, added: "The storm has yet to pass, it's a serious event."

Bush's administration suffered a grievous political blow after its haphazard response in late August 2005 to Katrina, which killed some 1,800 people and left hundreds of thousands homeless for months.

Katrina hit New Orleans as a stronger hurricane than Gustav and while initial storm damage was limited, its most devastating affects came in the following days when the city's levees collapsed under the weight of water.

On Monday, regional utility company Entergy reported that 50 percent of New Orleans -- just over 100,000 households -- was without electricity as Gustav's lashing winds tore down power poles and turned loose objects into unguided missiles.

About 750 National Guard troops were on hand to find the remaining residents and guard against the kind of post-Katrina anarchy that engulfed the city nicknamed The Big Easy, although Nagin reported only one arrest for looting.

The monster storm, which killed more than 80 people in the Dominican Republic, Haiti and Jamaica, slammed ashore Monday morning as a Category Two hurricane packing winds of 110 miles (175 kilometers) per hour.

About four hours later Gustav was downgraded to Category One as it weakened overland, with wind gusts still reaching 90 miles (145 kilometers) per hour, the National Hurricane Center reported.

Louisiana Governor Bobby Jindal said there were unconfirmed reports that three critically ill patients had died while being transported to safer ground.

The Orleans Levee Board reported that the water embankments were "in good shape and holding."

"There is some minor overtopping -- splashing of waves -- in the Industrial Canal," a statement by the city government said.

"No levee breaches have been reported. Only approximately six inches (15 centimeters) of flooding seen in the Upper Ninth Ward," it said.

Officials breathed easier after the US Coast Guard caught a barge and two small boats that had broken loose in a city canal, threatening to ram a levee wall and cause a breach of the kind that was so disastrous during Katrina.

At a press conference in his command center in Baton Rouge, Jindal said Gustav was heading across Louisiana at a speed of 15 miles (25 kilometers) per hour, but storm surges and tornadoes still posed a threat.

New Orleans' levee system is still being rebuilt after Katrina at a cost of 15 billion dollars, and Gustav will add to the financial strain of reconstructing a region still reeling from that devastation three years ago.

California-based consultancy Eqecat Inc. estimated that insured losses would range from six to 10 billion dollars. About five percent of oil and gas production in the Gulf of Mexico will be lost for a year, it added.

Stalked by memories of the Katrina tragedy, Republican White House hopeful John McCain shelved most of the opening day of the St Paul convention and stopped by a disaster relief center in Waterville, Ohio.

McCain's Democratic rival Barack Obama cut short campaigning to return to Chicago later Monday, and invited his campaign's mammoth base of donors to give money and time towards relief efforts.

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