Hurricane Felix has weakened to a Category 1 storm over Nicaragua, according to the US National Hurricane Center.
Felix hit the Caribbean coastline of Nicaragua and Honduras earlier today as a Category 5 hurricane, the most powerful type of storm.
Two people were reported dead in Puerto Cabezas port in northern Nicaragua, where high winds tore the roofs off homes and badly damaged a church.
Thousands of people fled Central America's Caribbean coast last night to escape the powerful winds and torrential rains of Felix.
The hurricane was upgraded from Category Four to Category Five due to maximum sustained winds of 256km/h. The strength of the storm has provoked fears of a repeat of Hurricane Mitch, which killed some 10,000 people in Central America in 1998.
Up to 40,000 Hondurans were evacuated to hurricane shelters, but some 15,000 people were unable to find transportation due to fuel shortages and have been forced to face the storm in their homes.
Hundreds of tourists were flown to the Honduran mainland from beach and diving resorts on the Bay Islands, and there were queues at supermarkets and gas stations in coastal cities.
Irish charity Goal has allocated €80,000 in emergency funds for affected communities in the Gracias a Dios region of Honduras. "Substantial quantities of food and non-food items have been put in place to help those likely to be effected by the hurricane," a Goal spokeswoman said.
Felix, the second hurricane of the 2007 Atlantic season, follows Hurricane Dean, which killed 27 people in the Caribbean and Mexico in August.