A weakened tropical storm Gustav is starting to fade as it moves through Louisiana.

Gustav, with maximum sustained winds of 95 kilometres per hour, was downgraded to a tropical storm late Tuesday evening, according to the U.S. National Hurricane Center. At 11 p.m. ET, it was 30 kilometres southwest of Alexandria, Louisiana.

With its current movement, Gustav is expected to move across Louisiana and reach into eastern Texas by Tuesday.

According to reports from ABC News, water was splashing over the Industrial Canal floodwall in New Orleans, creating ankle-deep flood areas. But city officials were optimistic the main levees would hold and major flooding would be averted.

"We are seeing some overtopping waves," said Col. Jeff Bedey, commander of the Army Corps of Engineers' hurricane protection office.

"We are cautiously optimistic and confident that we won't see catastrophic wall failure."

Despite the downgrade, Gustav had still packed gusting winds of more than 175 km/h when it struck shore in Cocodrie, southwest of New Orleans.

"It has been downgraded but that does not mean we are out of the woods. This is still a storm to be reckoned with," said CTV's Marcia MacMillan, reporting from New Orleans.

Louisiana Gov. Bobby Jindal echoed that sentiment at a news conference Monday afternoon. He warned that the worst is not over with the possibility of more rain, tornadoes, tidal surges and additional flooding in the forecast.

Earlier, forecasters had feared the storm could make landfall as a devastating Category 4 system.

MacMillan said forecasters were expecting the storm to dump about 50 centimetres of rain on the region. Three years ago the devastating Hurricane Katrina hit east of New Orleans, leaving over 1,600 dead and thousands homeless.

Gustav has only been linked to one death in the U.S., when a woman was killed in a collision driving from Baton Rouge to New Orleans. But before making landfall, the hurricane had already been blamed for at least 94 deaths in the Caribbean.

Much of southern Louisiana was deserted ahead of the storm. New Orleans Mayor Ray Nagin issued a mandatory evacuation, and according to officials roughly 2 million residents had fled the city and other at-risk areas by Monday morning.

About 10,000 people decided to ride out the storm in New Orleans while about 100,000 remained in their homes along the coast.

MacMillan said some damage could already be seen Monday morning as strong winds knocked down signs and electricity was temporarily cut off in the city's French Quarter. However, she said officials were mainly concerned about flooding.

"After Katrina they did want to learn a lot of lessons and they have in terms of the evacuation and in terms of the organization and preparedness, but those levees are still vulnerable," she said.

"The levees can only take a storm surge of eight feet. We're looking at a potential storm surge of 20 feet with this storm so that's the real concern, that they're still vulnerable, they're not fortified, they're not strong enough."

New Orleans Police Superintendent Warren Riley spoke to MacMillan in the French Quarter on Monday afternoon and told her that, from what he has seen, the damage in the city was limited to downed trees and debris, with no serious damage to houses.

"Compared to Katrina, this is absolutely a great day for us," he said.

U.S. president George Bush on Monday said he was satisfied with officials' efforts to prepare for Gustav.

"All in all what I look for is to determine whether assets are in place to help, whether or not there is coordination and whether or not there is preparation for recovery, and to that end I feel good about this event," Bush said, speaking in Texas where many of the evacuees have been taken.

Bush also congratulated those who have followed the evacuation orders and left their homes, and thanked the states that have welcomed the evacuees.

Ghost town

MacMillan said New Orleans was a virtual ghost town Monday, that is, until the eye passed over the city.

"For the last 24 hours we have not seen anyone in the French Quarter, but now we're seeing more than just police and National Guard on the streets," said MacMillan.

"(Officials) still want people to stay inside; the death, damage and destruction come after the storms. It's not always the wind, it's the aftermath. They want people to stay tight."

In New Orleans proper, about 50 per cent of the city, an estimated 100,000 customers, are without power. MacMillan said officials are not sure when the power will be restored as they are waiting for the other half of the storm to come in.

About 400 km to the west, the Texas town of Beaumont was battening down in advance of Gustav's arrival.

Capt. Brad Penisson of the Beaumont Fire Department told CTV Newsnet that evacuation efforts prior to Gustav were much smoother when compared to when Hurricane Rita hit them in 2005.

"We were better organized this time, we learned some lessons the hard way during Hurricane Rita and we were better prepared, better organized with our evacuation efforts," Penisson said.

Looters warned

New Orleans Mayor Ray Nagin has warned that anyone staying behind in New Orleans to loot homes would face the full force of the law. The city is under a mandatory evacuation order and Nagin has also ordered a dusk-to-dawn curfew to prevent robberies.

"Looters will go directly to jail. You will not get a pass this time," Mayor Ray Nagin told reporters on Sunday. "You will not have a temporary stay in the city. You will go directly to the Big House."

The evacuation order became mandatory at 8 a.m. local time on Sunday for the more vulnerable west bank of the Mississippi River, and starts at noon on the east bank.

Police and Louisiana National Guard troops remain behind to patrol evacuated neighbourhoods. "We will have unprecedented security," Nagin promised.

Riley said at one point on Sunday night, there were about 1,500 police officers along with 1,500 National Guard troops, basically doubling the number of officers on patrol they had during Hurricane Katrina.

The superintendent credits the police presence for the relative calm in the city, with only one arrest so far since the weekend.

"Someone tried to break into a service station (and) they were arrested by our officers," Riley said. "As you can see we blanketed the city pretty well. That's the only arrest since the evacuation."