Nagin's emergency declaration released late on Tuesday targets those still in the city unless they have been designated by government officials as helping with the relief effort.
The move comes after some citizens bluntly told the authorities who had come to deliver them from the flooded metropolis that they would not leave their homes and property.
An estimated 10,000 residents are believed to still be in New Orleans, and some have been holed up in their homes for more than a week.
While acknowledging the emergency declaration, police Captain Marlon Defillo said late on Tuesday that forced removal of citizens had not yet begun.
He said that officers who were visiting homes were still reminding people that police may not be able to rescue them if they stay.
"That would be a PR nightmare for us," Defillo said of any forced evacuations. "That's an absolute last resort."
Repeated telephone calls to Nagin's spokeswoman Tami Frazier seeking comment were not returned.
Meanwhile, engineers struggled to drain the saucer of a city of billions of litres of water, a Herculean task that could take months.
The Army Corps of Engineers said the timetable ranges from three weeks to nearly three months, depending on a string of variables, including rainfall, the still-unknown condition of the pumps abandoned to Hurricane Katrina, and whether the system can withstand the flotsam of broken buildings, trees, trash and corpses.
Some 10,000 residents are
believed to still be in the city
Work has also been impeded by sporadic gunfire coming from "criminals with guns", said Colonel Richard Wagenaar, the corps' chief district engineer.
The contractors are "getting used to it and that's pretty scary", he added.
Despite complications, "we have to get the water out of the city or the nightmare will continue", said Louisiana Environmental Secretary Mike McDaniel.
He said the water would be pumped into Lake Pontchartrain even though it is fouled with sewage, heavy metals, petrol and other dangerous substances.
The pumping began after the army engineers used hundreds of sandbags and rocks over the Labour Day weekend to close a 60-metre gap in the 17th Street Canal levee that burst in the aftermath of the storm and swamped 80% of the below sea-level city.
Following an aerial tour Tuesday, Nagin said the water was dropping ever so slightly, and he estimated that it covered 60% of the city.
"Even in areas where the water was as high as the rooftops, I started to see parts of the buildings," he said, adding, "I'm starting to see rays of light."
The job to rid the city of water
got off to a slow start
But he also warned of the horrors that could be revealed when the waters recede.
"It's going to be awful and it's going to wake the nation up again," said Nagin, who a day earlier upped his estimate of the toll in his city to as much as 10,000.
The job to rid the city of water got off to a slow start.
Once all of the city's pumping stations are running, they can move water at a rate of 110 billion litres a day and lower the water level 1.27cm per hour, or about 30cm a day.
But by late on Tuesday afternoon, Army Corps officials said only three of New Orleans' normal contingent of 148 drainage pumps were operating.
With the water dropping, military and police turned their attention to evacuating the streets. Among those refusing to leave was 69-year-old John Ebanks, who waved off would-be rescuers from a porch stocked with food, mosquito spray and other supplies.
"You've got to protect your property, that's the main thing," Ebanks said.
Some elderly, saying they are too
old to start over, refuse to leave
"This is all I've got. I'm pretty damn old to start over."
In St Bernard Parish, 38-year-old Dennis Rizzuto took a break from a Monopoly game with his family to emerge from the second-floor window of his home.
He said he had plenty of water, food to last a month and a generator powering his home.
"They're going to have to drag me" out, Rizzuto said.
In a plea to holdouts who might be listening to portable radios in the powerless city, Nagin warned that the fetid water could carry disease and that natural gas was leaking all over town.
"This is not a safe environment," Nagin said. "I understand the spirit that's basically, 'I don't want to abandon my city'. It's OK. Leave for a little while. Let us get you to a better place. Let us clean the city up."
Paratroopers move in
To that end, the Pentagon began sending 5000 paratroopers from the army's 82nd Airborne Division to use small boats, including inflatable Zodiac craft, to launch a new search-and-rescue effort in flooded sections of the city.
Some National Guardsmen and helicopters were diverted from their search missions on Tuesday to fight fires, an emerging threat in a city that is still at least a day and a half away from restoring the first running water since the storm.
Paratroopers are using boats in
a new search-and-rescue effort
A candle was blamed for starting one major blaze in the lower Garden District - a historic neighbourhood of mostly wooden homes.
The flames started in an abandoned brick building and spread to a neighbouring apartment house.
The blazes burned for hours before Chinook helicopters with water pouches were brought in to fight the blaze.
New Orleans Police Superintendent Eddie Compass said lawlessness in the city "has subsided tremendously", and officers warned that those caught looting in an area where the governor has declared an emergency can get up to 15 years in prison.
About 124 prisoners filled a downtown jail set up at the city's train and bus terminal. "We continue to get better day by day," Compass said.
The signs of hope came against increasingly angry rhetoric over the federal response as too little too late.
In Washington, congressional leaders planned hearings into the aftermath of the storm.
Joseph Lieberman: We need to
rebuild people's confidence
"We need to rebuild the confidence of the American people ... in our government's ability to protect them from attack, whether it comes from nature or from terrorists," said Democratic Senator Joseph Lieberman.
"The government simply did not act quickly and effectively enough."
Jefferson Parish president Aaron Broussard was even more blunt.
"Bureaucracy has murdered people in the greater New Orleans area," he said on CBS' Early Show.
"Take whatever idiot they have at the top of whatever agency and give me a better idiot. Give me a caring idiot. Give me a sensitive idiot. Just don't give me the same idiot."
Five of the 13 sub-basins in New Orleans were still seriously flooded, and barges and crews were getting into place to fix levee breaches at two other spots - the London Avenue canal in the northwest and the Industrial canal in the east.
Once the canals are fixed, then more pumps can start running.
An emerging threat in the
devastated city is fires
The levees were deliberately breached in some spots to let the water flow back out into Lake Pontchartrain, where the water level had dropped below that inside the city.
"We're working every avenue to do whatever we can to get things back in order," said Walter Baumy, Army Corps manager for the project.
"We're going to accomplish the mission of getting the water out of the city."