This aerial photo released by the United States Coast Guard shows flooding from Hurricane Gustav in the Rigolets strait in eastern New Orleans Monday. (U.S. Coast Guard/Associated Press)

Hurricane Gustav weakened into a tropical storm late Monday night, several hours after making landfall about 100 kilometres from the still-fragile city of New Orleans.

In its 11 p.m. report, the U.S. National Hurricane Center said winds had dropped to 95 km/h and that the storm was expected to continue weakening as it crossed over western Louisiana into northeastern Texas.

Though New Orleans was assaulted by rain and strong winds earlier Monday, the city appeared to have avoided a disaster on the scale of the devastation Hurricane Katrina wrought in 2005.

"It looks like New Orleans has dodged a bullet," NBC reporter Kristen Dahlgren said earlier Monday.

Hurricane Gustav made landfall around 9:30 a.m. near Cocodrie, La., about 110 kilometres southwest of New Orleans, as a Category 2 storm. Though trees were knocked over and buildings damaged by the winds, the gusts weakened by early afternoon and the storm was downgraded to a Category 1 — the lowest hurricane rating on the Saffir-Simpson Scale — by the hurricane centre in its 3 p.m. report.

Wind had blown a few centimetres of water over the top of the Industrial Canal's flood wall, which broke during hurricanes Betsy and Katrina, but the city's levees were expected to hold.

All coastal warnings were discontinued in the hurricane centre's 11 p.m. report, although it cautioned that tornadoes could form over the lower Mississippi Valley and the Central Gulf Coast late Monday or early Tuesday.

Storm surge a concern

New Orleans was largely deserted, with only about 10,000 people remaining after a massive evacuation on Sunday. But there was still concern late Monday about the storm surge — water driven in from the sea — that could reach anywhere from three metres to nearly five metres, which is higher than the city's levees.

Emergency workers and volunteers work to sandbag leaking floodgates between St. Bernard Parish and the Plaquemines East Bank levee protecting the town of Braithwaite, La., on Monday. (Lisa Krantz/San Antonio Express-News/Associated Press)

"As the storm continues to pass us, it's going to start to whip waters and storm surge … through those canals and cause more overtopping," New Orleans Mayor Ray Nagin said.

The surge, expected to hit near and to the east of Cocodrie, could be extremely dangerous, the hurricane centre said.

Gustav could also drop 300 millimetres of rain, and perhaps even 500 millimetres in small areas by Thursday, as it moves inland, posing flood threats.

Those who decided not to flee New Orleans and instead braved the storm stepped outside Monday to experience its enormous strength. While some claimed victory over the treacherous forecast, others acknowledged it was just a levee wall that separated them from disaster.

"We've seen a very well-prepared nation for Hurricane Gustav," said Harvey Johnson, the Federal Emergency Management Agency's deputy director. "That was Act One in the play. Act Two is about to unfold."

Close to 2 million people fled before storm hit

The U.S. federal government took extensive preparations to avoid a repeat of the disaster in New Orleans that followed Hurricane Katrina in August 2005.

"We don't expect the loss of life, certainly, that we saw in Katrina," Johnson said earlier Monday.

"But we are expecting a lot of homes to be damaged, a lot of infrastructure to be flooded and damaged severely."

Authorities reported eight deaths related to the storm, most of them traffic deaths, including four people killed in Georgia when their car struck a tree as they attempted to flee the storm. A 27-year-old Lafayette, La., man was also killed when a tree fell on his house.

Port Arthur, Texas residents fleeing Hurricane Gustav fill the Beech Street Baptist Church in Texarkana, Ark., to capacity over Labor Day weekend. (Tanner Spendley/Texarkana Gazette/Associated Press)

Across the southern U.S., thousands of Gulf Coast residents prepared to sleep in shelters Monday night. Just under two million people fled their homes before Gustav made landfall.

"I'm just hoping we can go back home to find that we still have a home," said Damien Edmond, who was staying in a Louisiana hotel.

Homeland Security Secretary Michael Chertoff told CBS that search and rescue would be the top priority. Special vehicles, aircraft, coast guard and navy ships are ready to act.

Canada sent two aircraft to Florida on Monday to assist with search and rescue efforts. Two CC-130 Hercules aircraft deployed from Greenwood, N.S., and Winnipeg to provide assistance with the next phase of hurricane relief efforts, the Canadian Forces said.

The hurricane has disrupted the Republican convention in Minnesota. On Monday, only about two hours of routine proceedings took place, the CBC's Henry Champ reported.

President George W. Bush on Monday was in Texas, where emergency personnel were standing by.

Gustav was blamed for more than 90 deaths in the Caribbean after it hit Haiti, the Dominican Republic and Jamaica last week. Cuba and the Cayman Islands were also affected by the hurricane.

With files from the Canadian and Associated Press