U.S. President George W. Bush vowed that the federal government will pay most of the costs of rebuilding New Orleans and the hurricane-ravaged Gulf Coast, which could reach more than $200 billion.

"There is no way to imagine America without New Orleans, and this great city will rise again," said Bush, speaking from in the heart of the French Quarter.

Bush also apologized for the second time this week for the government's slow response, and ordered all Cabinet secretaries to join in a comprehensive review of the failure.

Bourbon Street in New Orleans, Louisiana. (Photo by Joe Raedle/Getty Images)

"Four years after the frightening experience of Sept. 11, Americans have every right to expect a more effective response in a time of emergency," Bush said. "I as president am responsible for the problem, and for the solution."

Bush also proposed:

Turning over surplus federal property to low-income citizens to build homes, with mortgages or assistance from charitable organizations.

New Orleans Mayor Ray Nagin at a news conference on Thursday, Sept. 15, 2005. (AP Photo/Cliff Schiappa)

Establishing worker recovery accounts to provide up to $5,000 for job training, education and child care during victims' search for employment.

A 100 percent reimbursement to states to cover their costs of health care for treating many evacuees through the end of next year.

$1.9 billion to reimburse states for educating displaced students, including some money that could go to religious schools.

Six-month forgiveness on student loan interest for affected areas, at an estimated cost of $100 million.

Parts of New Orleans to reopen next week

Parts of the city of New Orleans will reopen for business next week. Mayor Ray Nagin made the announcement on Thursday: "The city of New Orleans will start to breathe again."

The announcement came amid progress in restoring power and water service and the day after government tests showed that floodwaters in the city still contain dangerous bacteria and industrial chemicals, but the air is safe to breathe.

The mayor said the first section to reopen to residents will be Algiers, across the Mississippi River from the French Quarter, on Monday.

The Uptown section, which includes Tulane University and the Garden District, will reopen in stages next Wednesday and next Friday. The French Quarter will open on Sept. 26.

Mayor Nagin said: "The French Quarter is high and dry, and we feel as though it has good electricity capabilities, but since it's so historic, we want to double- and triple-check before we fire up all electricity in there to make sure that, because every building is so close, that if a fire breaks out, we won't lose a significant amount of what we cherish in this city."

The reopened areas represent 182,000 residents out of a city of nearly half a million.

Nagin said there should be power in areas where people will be allowed back. But the water will be good only for flushing toilets, not for drinking and bathing.

Major retailers will use the city's Convention Center to supply returning residents with food, wood and other supplies that they will need.

The return will mark the start of what the mayor said will probably be the biggest urban reconstruction project in U.S. history.

"My gut feeling right now is that we'll settle in at 250,000 people over the next three to six months and then we'll start to ramp up over time to the half- million we had before and maybe exceed," Nagin said. "I imagine building a city so original, so unique that everybody's going to want to come."

The death toll in Louisiana climbed to 474 on Wednesday, and it was expected to rise further as state and federal officials continued collecting decayed corpses and identifying them through DNA.