A US appeals court has reversed itself and found the Army Corps of Engineers cannot be liable in property owners' lawsuits over flood damage during Hurricane Katrina.

The same three-judge panel from the 5th US Circuit Court of Appeals that sided with plaintiffs earlier this year withdrew that decision on Monday and replaced it with a new ruling in the federal government's favor.

More than 400 property owners had filed lawsuits after the hurricane, many targeting the Corps of Engineers.

The plaintiffs accused the Corps of Engineers of delaying the armourment of the Mississippi River-Gulf Outlet shipping channel against flood damage due to incorrect scientific decisions rather than public policy considerations, which would make it liable for the damages.

Judge Jerry Smith, writing for the court, said the Corps of Engineers was immune from liability for property damage under the "discretionary function exception" to the Federal Tort Claims Act, which governs litigation against the US government.

The exception bars lawsuits against the government for conduct arising from statutes and regulations that do not require an agency's action but involve its discretion.

The ruling overturns a landmark 2009 decision by US District Judge Stanwood Duval Jr, which held the corps responsible for the catastrophic flooding of the southern US city.

New Orleans is still struggling to recover completely from the devastation of Katrina, which swept across the city on Augusut 29, 2005, killing more than 1,800 people and causing billions of dollars of damage along the coast.