Al Jazeera's Cath Turner in New Orleans said that more than one million homes remain without power and roads into the city remain closed.
The news comes as a new storm, Tropical Storm Hanna, slammed into the Caribbean nation of Haiti on Tuesday, killing at least 10 people in the city of Gonaives, officials said.
Forecasters predict it could hit the southern US states of Georgia and South Carolina late in the week.
Another tropical storm, Ike, also formed late on Monday afternoon in the Caribbean.
The storm tore roofs off houses, damaged power lines and caused severe flooding across the region.
|McCain helped pack aid boxes during
a campaign stop in Ohio [AFP]
But officials said the city's levees, which failed disastrously during 2005's Hurricane Katrina, managed to hold against the floodwaters.
A mandatory evacuation order and curfew remained in effect across the city, while hospitals worked with skeleton crews and back-up power, although officials said the city's airport would re-open later on Tuesday evening.
Fewer than 10,000 people remained in New Orleans during the storm, according to reports, while police and several thousand national guard troops patrolled the city in a bid to prevent looting.
Trail of destruction
George Bush, the US president, said on Tuesday it was too early to assess the damage Hurricane Gustav had also caused to energy operations in the Gulf of Mexico, but added there were some "encouraging signs."
He also said the hurricane and its impact on the Gulf of Mexico region, which normally pumps a quarter of US oil output and 15 per cent of its natural gas, showed the need for the US to increase its own domestic energy supplies and lessen dependence on foreign oil.
John McCain, the Republican presidential candidate, also ordered the curtailment of events at the party's national convention this week in St Paul, Minnesota, in response to the crisis.
The storm slammed ashore Monday morning as a Category Two hurricane, with strong winds of up to 175 kph before weakening as it moved further inland.
It had already left a trail of destruction across the Caribbean, hitting the Dominican Republic, Haiti, Cuba and Jamaica and leaving more than 80 people dead.
The latest hurricane comes three years after New Orleans was devastated by Hurricane Katrina, which killed 1,500 people and caused more than $80bn in damage.