While the human and economic toll of Hurricane Katrina continues to rise, a toxic mix of dead bodies, human waste and chemicals now poses a new threat to the devastated city of New Orleans.

As the city began pumping the filthy water back into Lake Pontchartrain, Mayor Ray Nagin warned residents to brace themselves for ugly scenes as the foul water revealed its horrific secrets.

"It's going to be awful. It's going to wake the nation up again," said Nagin, who has suggested that 10,000 may have died in his city alone.

Already, more and more bodies are appearing, floating in the water, or pointed out by people being rescued from their homes.

There are reports that just east of the city, 22 bodies were found roped together around a pole. Police believe they tried to escape the flood waters by tying themselves together.

After engineers fixed the ruptured levee that flooded 80 per cent of the city the waters began gradually dropping.

However the water that is being pumped back into Lake Pontchartrain is not the same water that flooded the city.

This water is laced with raw sewage, bacteria, heavy metals, pesticides and toxic chemicals -- sparking fears of a major health disaster.

Environmental Officials say that each of the estimated 140,000 to 160,000 homes that were submerged in the hurricane is a potential source of fuel, cleaners, pesticides and other potentially hazardous materials found in garages or under kitchen sinks.

They estimate that more than 200 sewage plants in Louisiana, Mississippi are affected and that hundreds of businesses have storage tanks that are likely leaking various chemicals into the flood-waters.

And although two large oil spills from leaking storage tanks are now under control, thousands of other smaller spills continue to coat the city's floodwaters with a rainbow sheen.

One city official said the water was contaminated with the deadly E-coli bacterium.

The Environmental Protection Agency and the Department of Health and Human Services issued a joint statement Tuesday warning people that "every effort should be made to limit contact with floodwater because of potentially elevated levels of contamination associated with raw sewage and other hazardous substances."

The statement urged anyone exposed to the water to wash with soap and water and alert medical personnel about open cuts.

"Early symptoms from exposure to contaminated flood water may include upset stomach, intestinal problems, headache and other flu-like discomfort," the statement added.

Toxicologists have also warned that pumping the toxic mix from the city's streets into coastal waters would also pose a threat to ecosystems and fisheries.

Results of the first samples of the city's floodwaters taken on Saturday by the EPA are expected later in the week.

However despite the enormous health hazards and the mandatory evacuation order imposed by Mayor Ray Nagin Wednesday, many residents still refuse to budge.

"I would like everyone to get out because it's a health risk. Mosquitoes that are biting dead people are starting to fly," Nagin warned.

Planes will likely be used to spray mosquitoes amid fears of an outbreak of cholera or West Nile virus.

Nagin said that once pumping was completed, it could take several weeks more to clear the debris.

Some military engineers are measuring the process in months rather than weeks, and are warning that it could take a year or more before New Orleans is once again habitable in any meaningful sense.

Meanwhile the costs of the rescue operation continue to soar.

U.S. President George Bush asked Congress for another $52 billion US Wednesday for the next stage of recovery on top of the $10.5 billion agreed last week. Early estimates put the final government bill above $160 billion US.

Bush has so far resisted calls for an independent inquiry, choosing instead to lead a probe himself.

He said now was not the time to assign blame, but the debate over what went wrong is only just beginning.

Senator Hillary Clinton has described the federal emergency planning under Bush as "a recipe for disaster."

And Aaron Broussard, president of the ravaged Jefferson Parish in Louisiana, said: "Bureaucracy has committed murder and bureaucracy must stand trial, now."