Thousands of Hurricane Katrina refugees in New Orleans' 10 shelters must be evacuated, given the deteriorating situation, says Louisiana Gov. Kathleen Blanco.

"The situation is untenable,'' Blanco said at a news conference on Tuesday. "It's just heartbreaking.''

The storm's devastating impact on New Orleans is worsening as floodwater from breakdowns in the levee system steadily fills the city's streets.

Blanco said the power could be out for a long time, and with the break of a major water main, no drinkable water is available.

Mayor Ray Nagin said 80 per cent of the city was underwater, and in some places, the water was nearly seven metres deep.

A historical marina in the city was in flames, with no crews available to extinguish the blaze, as officials worked feverishly to search for residents who waited to be rescued.

New Orleans had appeared to dodge a catastrophe on Monday despite forecasters' predictions that the city, which lies mostly below sea level, would be overwhelmed by Katrina.

But by Tuesday, conditions began to deteriorate when the water began to steadily rise. Water lapped at the edge of the city's historic French Quarter after failed pumps and levees sent water from nearby Lake Pontchartrain coursing through the streets.

"It's a very slow rise, and it will remain so until we plug that breach. I think we can get it stabilized in a few hours," Terry Ebbert, New Orleans' homeland security chief told The Associated Press.

Officials are planning to use twin-rotored army helicopters to drop 1,360-kilogram sandbags on the breach to stop the flow of water, which would normally have been evacuated by a network of pumps.

The city of 480,000 was mostly evacuated over the weekend as Katrina closed in, but some refused to leave -- or else they were too poor or sick to go on their own.

An estimated 40,000 homes in St. Bernard Parish, just east of New Orleans, are submerged, but other suburban areas, like Metarie, which is northwest of downtown New Orleans, are also underwater.

The U.S. Coast Guard dispatched helicopters to pluck residents from the roofs of their homes where they sought refuge. Boats are also being used.

In many instances, people had climbed into their attics to escape rising floodwaters. In those cases, either residents, police or the U.S. Coast Guard were forced to cut holes in their roofs to allow escape. There were stories of some people blasting exit holes in their roofs with shotguns.

While bodies were seen floating in the streets, no deaths have officially been confirmed yet.

Tulane University Medical Center Vice President Karen Troyer-Caraway told CNN earlier Tuesday that officials were considering evacuating its 1,000 patients because the downtown hospital was surrounded by water.

"The water is rising so fast I cannot begin to describe how quickly it's rising," she said.

Emergency efforts

More than one million residents remained without electricity across Louisiana, Mississippi and Alabama -- some without clean drinking water. And full restoration could be a few months away.

There were about 40,000 people in Red Cross shelters, and officials say it could be weeks or months before most of them will be able to return home.

Emergency medical teams from across the country were sent into the region and President George W. Bush cut his Texas vacation short to focus on the hurricane file.

Bush asked individual Americans to get involved with the relief effort, suggesting anyone who wishes to help could call 1-800-HELPNOW, log on to the Red Cross website at www.redcross.org or get in touch with the Salvation Army.

"The good folks in Louisiana and Mississippi and Alabama and other affected areas are going to need the help and compassion and prayers of our fellow citizens,'' Bush said during a speech in California.

The Federal Emergency Management Agency (FEMA) has sent medical teams and rescue squads to the stricken areas, plus supplies like baby formula, communications equipment, generators, water and ice.

And about 7,500 National Guard soldiers and airmen have been mobilized by state governors to assist in the relief effort.

Canada, meanwhile, sent condolences to the victims and offered help.

Deputy Prime Minister Anne McLellan said she told U.S. secretary of homeland security Michael Chertoff that Canada was ready to provide assistance if needed.

The Canadian Red Cross will send about 200 volunteers with special skills in managing disaster shelters, but the organization said they're not asking the public at this point for donations.

"The States has a huge capacity, so when there's a disaster like this, we're not asking people to open their wallets in this particular instance," Don Shropshire of the Canadian Red Cross told CTV News.

With reports from CTV News and the Associated Press