"We hope and pray that Hurricane Rita will not be a devastating storm, but we've got to be ready for the worst," said US President George Bush, who was heavily criticised for an ill-prepared federal response to Hurricane Katrina.
Bush on Wednesday ordered a state of emergency in Texas and Louisiana as they braced for the arrival of Hurricane Rita, the White House said.
The US National Hurricane Centre said Rita's winds increased to 265kph as it moved over the warm waters of the Gulf of Mexico after lashing the Florida Keys on Tuesday. The storm did little damage to the vulnerable Florida islands, but had intensified to a Category 4 storm by morning.
The latest upgrade made Rita stronger than Hurricane Katrina, which devastated parts of Louisiana, Mississippi and Alabama last month and killed at least 1037 people.
Markets reacted immediately as the storm gained strength, with the prospect of more destruction and oil-supply interruptions affecting everything from stocks and the dollar to oil prices.
Rita was expected to strengthen over the central Gulf but may weaken slightly as it continues west, the National Hurricane Centre said earlier on Wednesday.
Bush's popularity has plummeted
in the wake of the Katrina mess
The storm was expected to make landfall by Saturday "as a major hurricane ... at least Category 3", the centre said. A Category 3 storm can cause extensive damage.
Rita would most likely hit the Texas coast southwest of Galveston, where in 1900 at least 8000 people died in the deadliest US hurricane.
Galveston, on a barrier island, began evacuating residents on Tuesday. About 80km inland, Houston Mayor Bill White ordered an evacuation of residents in areas prone to storm surges or major floods.
As many as 1.2 million people were expected to begin leaving Houston by evening, officials said. Katrina displaced about one million people, including nearly all of New Orleans's 450,000 residents.
Stores in Houston, America's fourth most populous city, quickly ran out of emergency supplies, plywood and food.
Texas Governor Rick Perry urged Texans along a 483km stretch comprising most of the state's coastline, to leave.
"If you're on the coast between Beaumont and Corpus Christi, now's the time to leave," Perry said. He said nursing home residents already were being evacuated.
Nasa prepared to evacuate its Johnson Space Centre in Houston and turn over control of the International Space Station to its Russian partners.
Hurricane Katrina killed more
than 1000 people
Taking lessons from problems after Katrina hit, US Homeland Security Secretary Michael Chertoff said authorities had positioned supplies and were checking on communications systems.
"I hope that by doing what the state officials and mayors are doing now ... getting people who are invalids out of the way, encouraging people to leave early, that when the storm hits, there will be property damage but hopefully there won't be a lot of people to rescue," Chertoff said.
Louisiana declared a state of emergency. New Orleans, flooded by Katrina and considered vulnerable to Rita, was taking no chances. Mayor Ray Nagin said two busloads of people had been evacuated already and 500 other buses were ready.
"We're a lot smarter this time around," he said. "We've learned a lot of hard lessons."
About 1100 Katrina evacuees still in Houston's two mass shelters were being sent to Fort Chaffee, Arkansas.
Rita's centre was about 1215km east-southeast of Corpus Christi, Texas at 1500 GMT. The hurricane was moving at about 21kph, the hurricane centre said.
Oil companies that were just starting to recover from Katrina evacuated Gulf oil rigs as Rita moved closer.
Rita's projected path puts it south of some of the major-oil producing areas, and the storm could threaten up to 18 Texas refineries, which account for 23% of US refining capacity, the US Energy Information Administration said.