The New Orleans riverfront has been hit by a series of massive blasts, and fires are raging in the area.
Details are sketchy, but the blast is believed to have involved a chemical factory. A large cloud of acrid, black smoke is drifting over New Orleans.
The news came as extra troops were sent to quell lawlessness in the city, where thousands are stranded without food or water in Hurricane Katrina's aftermath.
President Bush is to visit areas hit amid anger at the federal response.
The Senate approved $10.5bn (£5.7bn) emergency aid, which the House of Representatives is expected to back within the next 24 hours.
But the head of the New Orleans emergency operations described the relief effort as a national disgrace.
The federal authorities were too slow to respond, Mayor Ray Nagin said.
Louisiana's governor said 300 "battle-tested" National Guardsmen were being sent to the crippled city.
"They have M-16s and are locked and loaded. These troops know how to shoot and kill and I expect they will," Kathleen Blanco said.
Washington pledged a further 4,200 guardsmen in coming days, and said that 3,000 army soldiers may also be sent to the city where violence has disrupted relief efforts.
The deployment came as thousands were finally taken from the Louisiana Superdome, where up to 20,000 have been corralled amid heat and squalor since Katrina struck.
Hundreds or even thousands are feared to have drowned in the city - and up to 60,000 could still be stranded, the US coastguard says. (emphasis mine)
People made homeless by the flooding have grown increasingly desperate, as looting swept the city.
There have been outbreaks of shootings and carjackings and reports of rapes.
The federal emergency agency was trying to work "under conditions of urban warfare", director Michael Brown said.
The situation at the city's convention centre, where up to 20,000 other residents sought refuge, was also said to be desperate.
Families slept amid the filth and the dead.
The muddy floodwaters are now toxic with fuel, battery acid, rubbish and raw sewage.
"Call it biblical. Call it apocalyptic. Whatever you want to call it, take your pick," one survivor said.
"There were bodies floating past my front door. I've never seen anything like that," Robert Lewis said, near tears.
Residents have expressed growing anger and frustration with the disorder on the streets and timeliness of relief efforts.
Governor Blanco told ABC she had "no idea" how many people had died because of the inadequacy of the response.
"We're not into the blame game... I've been trying to save lives," she said.
The Houston Astrodome in Texas had to temporarily close its doors because of lack of space, after receiving 11,000 evacuees.
But the federal emergency management association has asked for patience.
The agency says it has aid to deliver, but it takes time to reach them, given the magnitude of the disaster.
According to the White House, about 90,000 sq miles (234,000 sq km) has been affected by the hurricane.
The mayor of New Orleans has ordered a total evacuation and warned it will be months before people can return to their homes.
http://news.bbc.co.uk/2/hi/americas/4207202.stm
No offense, but this is the problem. The news and, apparently, officials have spent an inordinate amount of time focused on looters and petty crime and haven't fixed the biggest, most important problem, which is the tens of thousands of people who are without food or shelter. The criminals make up an insignificant percentage of the whole. But continued ineffectiveness in remedying the situation, that number will only grow. Get people some shelter, then worry about criminals. PEACE.
