Hurricane Isaac pounded New Orleans with fierce winds and torrents of rain Wednesday, but the multi-billion dollar flood defenses built after Katrina swamped the city seven years ago held firm.

Isaac was downgraded from a hurricane to a tropical storm, but officials warned that heavy rain would continue overnight and even into Friday, as the swirling vortex of cloud and storm-force winds was moving only slowly.

And an upbeat damage assessment from the Army Corps of Engineers was surely little consolation for those whose homes were submerged or left without power and those who were or forced to wait on roofs or in attics for rescue.

Storm water did gush over at least one levee on a lip of land that sticks out into the Gulf of Mexico, in an area away from the city outside the ring of levees and pumping stations built after the 2005 Hurricane Katrina.

Louisiana governor Bobby Jindal said the hurricane made landfall twice and is moving so slowly the state will probably be in for 12 to 16 inches of rain through Friday and up to 20 inches in some areas.

Isaac may wind up causing as much as $2.5 billion in economic damage in and around Louisiana and in the offshore oil sector in the Gulf of Mexico, according to early estimates from natural disaster modeler Eqecat.

As residents cowered in their homes, Isaac rolled slowly over Louisiana, dumping huge quantities of rain on a city known -- at least until Katrina -- for its love of jazz, great food and easy-going lifestyle.

More than half a million people were left without power after the hurricane, packing winds of 80 miles (130 kilometers) per hour, snapped utility poles and downed power lines.

The National Hurricane Center said the category one storm had forced a 'dangerous storm surge' onto the northern Gulf Coast, with waters mounting to 11 feet (three meters) in Louisiana and patches of coastal flooding.

Still, the flood defenses built around New Orleans after Hurricane Katrina held up under the battering, the US Army Corps of Engineers said.

The flood control system is "performing as designed. We are confident in the system," the corps said in a statement.

The Corps rebuilt the 133-mile system of levees, pump stations, floodwalls and surge barriers that surround New Orleans after levees failed during Katrina, seven years to the day, swamping the city.

An elaborate $14.4 billion (11.5 billion euro) overhaul is still underway.

But storm-driven waters spilled over a levee south of New Orleans and inundated a residential area that had been ordered evacuated.

The flooding in Plaquemines Parish, part of a tongue of land extending into the Gulf of Mexico south of New Orleans, saw water deluge over a levee on the east bank of that strip.

The water pressure on the barrage remains so strong that engineers are considering puncturing it to release some of the water, Jindal.

A total of 112 people at a nursing home, many in wheelchairs, were evacuated, the governor said.

Plaquemines Parish president Billy Nungesser said damage from Isaac in some areas was worse than that wrought by Katrina. He cited his home as an example.

"I stopped there to change clothes earlier. Part of my roof is missing. The back wall has moved and the water is being pushed through the bricks into the house," he said.

Nungesser added: "I don't know who is calling this a category one but this is no category one."

About 65 people were stranded in Plaquemines, officials said.

Local TV station WWL spoke to a handful who were taken to dry land by boat. They looked shocked and exhausted. One man clutched a little dog.

"It's horrible. Everybody's house is gone. Nobody's got a house in Braithwaite," Cheryl Hicken said as she climbed out of the boat.

"The water is over my head."

About 350 people were crammed into three emergency shelters in Plaquemines and officials were working on opening a fourth.

Claude Jones, 61, was trying to nap on a cot in the high school gymnasium without much luck. He'd been there two nights already and with his trailer in Empire likely totally destroyed he could be here for many, many more.

"I'm worried about my family," he told AFP. "My cousin's still down there and they say they can't rescue him because the weather's so bad."

Sharon Sylvia said she'd spent the night trapped on her roof, calling for help that didn't arrive until morning.

"Water's over the top of the roof," she told WWL. "We had to break through the ceiling and out through the attic. It's very bad down there. Very bad."

Elsewhere in the city powerful winds knocked over trees and ripped down power lines, leaving some 610,000 people without power, according to Entergy Louisiana, a local utility.

More than 4,000 members of the Louisiana National Guard had been mobilized, with 48 boat teams deployed around New Orleans.

US President Barack Obama was briefed on the hurricane and instructed disaster-relief agency FEMA to makes sure all available resources are mobilized to help state and local officials.

Katrina left behind a devastating sprawl of destruction and death when it hit New Orleans on August 29, 2005, and a bungled response by then president George W. Bush administration tarnished his second term in office.

Some 1,800 people were killed along the US Gulf Coast and in New Orleans thousands were left stranded on the roofs of their houses for days after Katrina's storm surge smashed levees long-warned to be inadequate.