Looting has broken out in New Orleans, which is reportedly around 80 percent under water after a breach in a levee failed on Tuesday, causing Lake Pontcharian to spill into the low-lying city.
“The devastation is greater than our worst fears, it is just totally overwhelming,” said Louisiana state Governor Kathleen Blanco said.
“A lot of people lost their lives ands we still don’t have any idea [how many] because the focus continues to be on rescuing those who have survived,” she said.
Authorities have announced the entire city must be evacuated, including around 10,000 refugees who sought shelter in the city’s Superdome.
Rescuers have reported pushing aside floating bodies to reach stranded survivors and New Orleans mayor Ray Nagin said rescuers are not even attempting to deal with the dead at this stage.
“Over the next 12 to 15 hours, water will rise on the east bank of New Orleans to the levels where some sections of the city which are dry now could see nine or 10 feet (more than three meters) of water,” said Mayor Nagin on CNN.
“The big challenge we have right now is to get the water out of the city. Until we can stabilise the levee system we can’t say when that’ll happen.”
Helicopters and boats continue to be used to reach people stranded on rooftops or in attics in flooded areas, however efforts have been hampered by live power lines, broken gas pipes and debris including cars floating below the waters’ surface.
Mayor Nagin said at least 30 buildings have collapsed however no attempt has been made to establish how many or a death toll in New Orleans.
The city has been left with no power, no drinking water and dwindling food supplies.
Widespread looting has led to police imposing a form of martial law, according to the BBC.
There are also reports of rioting inside a prison and hostage-taking inside a New Orleans prison and of attempted carjackings.
There are plans to airdrop giant sandbags to plug the levee breaches.
New Orleans is a bowl-like city mostly below sea level and protected by levees or embankments.
The magnitude of the storm’s destruction has also been felt along the shoreline of neighbouring Mississippi, where casinos, homes and fishing businesses now lie in ruins after the storm surge up to 10 metres high crashed ashore on Monday.
“This is our tsunami,” said AJ Holloway, mayor of the devastated resort city of Biloxi, where a tidal surge swept away bridges, sent boats crashing into buildings and flooded entire neighbourhoods.
At least 50 people are known to be dead in the town, around 30 of them killed when an apartment complex was demolished by the storm.
A million people remain without power across Mississippi, Louisiana and Alabama.
Risk analysts estimate the storm will cost insurers US$26 billion (A$35 billion), making it the costliest natural disaster in US history.
Oil prices have also soared, reaching an historic level of US$70.85 dollars per barrel as anxiety runs high over damage to US oil facilities, many of which are on the Gulf Coast.
About 3,500 Army National Guardsmen in Louisiana will help with security, shelter, removing debris and distributing water and food, said spokesman Jack Harrison.
More than 850 National Guardsmen in Mississippi have been activated, he said.
Thousands of aid volunteers have been mobilised for the US Red Cross’ biggest-ever natural disaster effort.