The death toll wreaked by Hurricane Katrina was expected to surge into triple figures today as experts speculated that it may be the worst natural disaster ever to hit the United States.

There were unconfirmed reports of at least 80 deaths in Mississippi where scores of homes were obliterated by the force of the storm.

The hurricane is expected to be one of the most expensive in US history in terms of the damage caused, with insurance costs predicted to rise up to #14 billion.

As the clean-up operation began, New Orleans Mayor Ray Nagin said he had a "heavy heart" and little good news for residents.

There was a serious levee break as dawn broke over the historic city, causing water to continue to rise up to 20ft and submerging 80% of the city.

"We have just about everyone you can think of out there trying to rescue individuals from their roofs," he said.

"We have an incredible amount of water in this city, both airports are under water, we have an oil tanker that has run aground and leaking oil, we have houses that have been literally picked up off their foundations and moved."

More than a million homes from Louisiana to Florida were left without power and authorities said it could be two months before electricity is restored to everyone.

Emergency workers said they could hear people screaming for help from the rooftops but had no way to reach them. Many of those stranded smashed their way out using axes.

The official death toll jumped sharply late last night when an emergency centre in Harrison County, Mississippi said an estimated 50 people had died in the county, with at least 30 dead at one beach-side apartment complex in the city of Biloxi.

Biloxi Mayor, AJ Holloway, said: "This is our tsunami."

The American Red Cross said its response was the organisation's largest yet to a natural disaster.

Some 40,000 people sought refuge in shelters across Mississippi and Louisiana, and volunteers urged residents to stay away from their homes for as long as possible.

Marty Evans, president, said extensive supplies, meals and medical supplies were prepared and ready to be shipped in as soon as roads were passable.

Several observers described the ravaged areas as "war zones," where hundreds of residents lost everything and hurricane winds blasted windows and turned entire streets into lakes. One woman said all she had managed to retrieve from her home was a shoe.

Mark Vislay of the US coastguard said several helicopters had moved in over rooftops trying to reach those stranded on submerged streets.

"It was extremely shocking - the water lines went up to the attics, there were people coming out of everywhere," he told CNN. "People were panicking and waving anything to get our attention."

Ten major hospitals in New Orleans were running on emergency back-up power.

The federal government began rushing baby formula, communications equipment, generators, water and ice into hard-hit areas, along with doctors, nurses and first-aid supplies.

The Pentagon sent experts to help with search-and-rescue operations.

Motorists attempt to dodge hurricane debris including a toppled gas tanker

Oil refiners said damage to their equipment in the Gulf region appeared to be minimal, and oil prices dropped back from the day's highs above 70 dollars a barrel.

But the refiners were still assessing the damage, and government said it would consider releasing oil from the nation's emergency stockpile if necessary.

British climate expert Julian Heming said it was difficult to assess whether global warning was producing more frequent and violent hurricanes in the Atlantic region but he said there was evidence it was increasing the "peak intensity" of the storms.

Mr Heming, from the Hadley Centre for Climate Prediction, in Exeter, said winds of 175mph were recorded at the height of Hurricane Katrina.

He told BBC Breakfast: "I think you have to look back at the historical records because in the Atlantic, the Caribbean and Gulf of Mexico area we tend to go through phases of several decades of higher activity of hurricanes and then decades of lower activity.

"The 30s to the 60s was a very high activity period and then from the 70s through to the mid-90s was a lot less hurricane activity.

"But now in the last decade it's increased again and we've seen a lot more hurricanes in the Atlantic and Caribbean area.

"Whether global warming is having an effect on that, we think it may possibly increase the peak intensity of some of those hurricanes but it's very difficult to filter out that signal from the longer-term natural variations in hurricane activity."

Katrina moved through the Gulf of Mexico as a 175-mph Category 5 storm - the most powerful ranking on the scale.

But it weakened to a Category 4 and made a slight right-hand turn just before it came ashore around daybreak yesterday near the Louisiana town of Buras, passing just east of New Orleans.

The city has not been hit directly by a major storm since Category 3 Hurricane Betsy struck in 1965.