America battered by its second hurricane in a week

Half a million flee their homes and Nasa cancels shuttle launch as 100mph winds and lashing rains hit coast

America's Gulf coast was battered by its second major storm in a week yesterday as Hurricane Lili blew in over the marshlands of central Louisiana, bringing 100mph winds, lashing rains and a threat of widespread flooding as far as 20 miles inland.

To the relief of hundreds of thousands of Gulf coast residents who had boarded up their homes and then fled north, the hurricane lost some of its power overnight and was downgraded from a category 4, with winds of up to 145mph, to category 2, with winds of 105mph.

By mid-morning, Lili had weakened to a category 1, with winds at 90mph.

That was a big relief to residents of Gulf coast citieswho went through Tropical Storm Isidore just a week earlier.

Lili remained a wild and dangerous beast, however, and the National Hurricane Centre in Miami described it as "potentially deadly".

"The surge could spread as much as 20 miles inland across the low-lying portions of the hurricane warning area," said a spokesman. "Rainfall accumulations of up to 10ins are possible near the path of Lili. These rains could cause dangerous flooding."

Weather officials said they expected the hurricane to rip the roofs off flimsier buildings, uproot trees and knock down lamp posts and telephone polls in its path.

Overnight, officials in every city and community along the coast had worried that they might find themselves in the eye of the hurricane. Resort towns along the coast boarded up, and every one of Mississippi's 12 coastal casinos turned off the slot machines.

Nasa closed down Mission Control in Houston, delaying a space shuttle launch for a week. The nation's biggest oil import terminal was also closed.

In all, an estimated half a million people fled their homes. The traffic heading inland got so bad on Wednesday night that police patrols urged some people to turn back, calculating that they were safer in boarded-up brick houses than they might be on roads when the rains hit.

In the end, the hurricane struck near New Iberia, Louisiana, about 150 miles south-west of New Orleans.

No news was immediately available from the eye of the storm, but elsewhere officials expressed relief.

"We dodged a bullet, thank God," said Ray Nagin, mayor of New Orleans, where television pictures showed deserted streets battered by wind and rain but no immediate sign of extensive damage.

In Morgan City, not far from New Iberia, there were reports of 45mph winds – considerably more benign than had been expected. In Lake Charles, in western Louisiana, the hurricane came and went in less than an hour, causing little damage other than a temporary power cut.

Just a week ago, Tropical Storm Isidore – downgraded from hurricane strength as it hit the United States – dumped more than 20 inches of rain on the region and caused $100m (£64m) of damage.

The rains were Isidore's greatest menace, while Lili was packing far more powerful winds. The crucial issue will be the size of the storm surge.

A 10ft surge can cause serious disruption for miles inland, but a 25ft surge – which was being forecast the night before the hurricane hit – could have literally submerged dozens of coastal towns.

It was the storm surge that caused the worst damage during Hurricane Audrey, which hit Louisiana in June 1957 and spread floods as far as 25 miles inland. Even as it lost momentum, Lili was being forecast as the worst hurricane since Audrey to hit the area.

This is nevertheless a region well used to hurricane warnings, and preparations were remarkably orderly. There was no unseemly rush on hardware stores and few signs of panic. About 800 National Guardsmen were on hand to deal with the worst of the damage, as well as 1,000 Red Cross staff and 14,000 rescue workers riding on "bucket trucks" with the ability to drain large quantities of water.

Lili has already been raging for several days, and earlier this week it ripped across the Caribbean, killing seven people and battering the tobacco-growing province of Pinar del Rio in Cuba. More than 350,000 Cubans were evacuated from low-lying areas as Lili flattened vegetation and smashed roofs and windows.