Louisiana officials said on Tuesday the state's death toll from the storm had risen to 423, up from 279 the day before. Mississippi had 218 deaths and there were seven in Florida.
Louisiana Attorney-General Charles Foti announced that the owners of a nursing home in St Bernard Parish just east of New Orleans had been arrested and charged with 34 counts of negligent homicide.
"Thirty-four people drowned in a nursing home when it should have been evacuated. I cannot say it any plainer than that," Foti said.
The owners, Mable and Salvador Mangano, turned down an offer from local officials to take the patients out by bus, and did not bother to call in an ambulance service with which they had a contract, he said.
The victims were found in an advanced state of decomposition, Foti said, and it is presumed they drowned when the storm hit.
But James Cobb, a lawyer for the owners, said they did all they could and had told family members that they could remove the patients if they wanted.
"What people have to understand is, you're presented with a horrible choice," Cobb said.
"You take people who are on feeder tubes, who are on oxygen, who are on medications and you put them on a bus to go 70 miles (112km) in 12 hours? People are going to die, people are going to die, we know that."
"Katrina exposed serious problems in our response capability at all levels of government, and to the extent that the federal government didn't fully do its job right, I take responsibility"
US President Bush
In a separate Hurricane Katrina development, the owners of a hospital where 44 bodies were found said they were those of critically ill patients who died in stifling heat after power was cut to the flooded building but before it could be evacuated.
Owners Tenet Healthcare Corp said no one still alive was left behind at Memorial Medical Center in New Orleans when help finally came.
The Louisiana attorney-general said he planned to investigate the 44 deaths at Memorial Medical Center as well, even as Tenant Healthcare said the patients died awaiting rescue.
At the White House, President George Bush took responsibility for the federal government's failures in handling the grim aftermath of the 29 August storm that displaced a million people, and he promised to find out what went wrong.
Bush visited the area for the third
time since Katrina hit
Bush for the first time took personal responsibility for the federal government's slow response to the emergency, which stranded tens of thousands of people in New Orleans, once home to 450,000.
"Katrina exposed serious problems in our response capability at all levels of government, and to the extent that the federal government didn't fully do its job right, I take responsibility," Bush said.
"I want to know what went right and what went wrong.
"Are we capable of dealing with a severe attack or another severe storm? That's a very important question and it's in our national interest that we find out exactly what went on so we can better respond," he said.
Federal Emergency Management Agency, FEMA, head Michael Brown resigned on Monday. A political ally of Bush with little hands-on experience in dealing with disasters, he was widely criticised for his performance.
The White House said Bush would address the nation from Louisiana on Thursday evening.
Facing heavy criticism and the lowest approval ratings of his presidency, Bush has visited the Gulf coast three times in the past two weeks, most recently touring New Orleans in a flatbed truck.
In the latest sign of tension between the administration and the state of Louisiana, Governor Kathleen Blanco criticised FEMA for moving too slowly to recover the dead and said she had hired a company to do the job.
FEMA spokesman David Passey said it had always been understood that Louisiana would take the lead in the collection of bodies.
The storm will likely be the costliest natural disaster in American history, with estimates ranging from $100 billion to $200 billion.
The US Congress has approved $62.3 billion so far for relief.
Total housing, commercial and public property losses by Katrina total about $100 billion, the National Association of Realtors said in its monthly economic forecast.
The natural disaster may cost
up to $200 billion
The group said the hurricane would have long-term consequences for the housing market and economy, boosting both home prices and construction costs.
For its part, the Army Corps of Engineers set 8 October as its target date to have flood waters removed.
"We're not really saying 'dry,' we're saying 'dewatered'," said Dana Finney, a Corps spokesman.
That meant the city would be dry enough for engineers to begin working on infrastructure, even if some pockets of water remained.