Texas officials warned of a catastrophe and rising water breached levees to flood parts of New Orleans anew tonight as a slightly weaker Hurricane Rita barreled toward the US Gulf Coast.
A chaotic and unprecedented mass evacuation of the region turned deadly when a bus carrying elderly evacuees fleeing the hurricane along a major escape route south of Dallas burst into flames and killed an estimated 24 people.
Rita was downgraded to a Category 3 storm as its maximum winds dropped to about 125 mph.
The storm headed northwest toward the Texas and Louisiana borders, where it was expected to make landfall early tomorrow.
"A further slow weakening is possible before landfall ... but Rita is still expected to come ashore as a dangerous hurricane," the US National Hurricane Center said.
This satellite image shows Rita's progress at 4.25am Irish time
US stocks edged higher and crude oil prices fell as the storm weakened, although nearly all crude oil production in the Gulf of Mexico and 30 percent of US refining capacity was shut down.
Rita was likely to cause a "catastrophic flood" that would inundate the city of Port Arthur in an 18- to 22-foot storm surge, said the director of the Texas Division of Emergency Management.
He predicted 16 hours of hurricane-force winds where the storm hits, as well as an onslaught of tornadoes.
Most residents fled the low-lying, largely poor city but some remained in Port Arthur, fearful of going to a shelter after the deadly violence and chaos that erupted in New Orleans when Hurricane Katrina hit three weeks ago.
Port Arthur Mayor Oscar Ortiz told CNN 95 per cent of the people in his town had left and he was putting out a mandatory evacuation order.
As motorists frantically jammed highways inland from the Texas coast in an evacuation of unprecedented scale, residents of Houston who had not yet escaped were advised to stay home.
Those on the highway faced a danger of becoming trapped in automobiles as the storm approached, authorities said.
"Those people at risk should not get on the highways to evacuate. People should prepare to shelter in place if they have not evacuated." Houston Mayor Bill White said.
At 2pm (local time), the center of Hurricane Rita was about 190 miles (305 km) southeast of Galveston, Texas and about 175 miles (280 km) southeast of Port Arthur, Texas, moving about 10 mph.
A hurricane warning remained in effect along a 450-mile (724 km) stretch from Port O'Connor, Texas, to Morgan City, Louisiana.
In New Orleans, fast-rising water from Rita's outer edge spilled over a freshly patched levee to flood a neighborhood already deserted and devastated by Katrina.
Water from the city's industrial canal, where the levee breached during Katrina, submerged houses in the Ninth Ward where nearly all the homes are already damaged beyond repair.
Water also poured out from under the canal's western barrier, which faces the city's center.
"There appear to be at least two breaches of some size," said Homeland Security Secretary Michael Chertoff in Washington.
In Baton Rouge, Louisiana, Dan Hitchings of the US Army Corps of Engineers said: "The waters in the industrial canal had risen very rapidly ... far above what was ever predicted or anticipated in the area."
He said workers had patched the levee with sandbags, crushed stone and compacted soil.