Bush promises a New Deal for the stricken Gulf coast

"Throughout the area hit by the hurricane, we will do what it takes," Mr Bush promised in a prime-time television address from New Orleans. "There is no way to imagine America without New Orleans, and this great city will rise again."

The signs yesterday were that after days of fumbling, Mr Bush had finally found his feet in responding to the disaster. "He gave hope," said Aaron Broussard, president of Jefferson Parish near New Orleans , "and people need hope more than anything."

Mr Bush's proposals include a "Gulf Opportunity Zone", offering tax breaks and for incentives businesses setting up after the devastation. For evacuees, the government will start tax-free "worker recovery accounts" of up to $5,000 (£2,700) per person to help with education, child care and retraining. There will also be a lottery offering free federal land to Katrina's poorer victims where they can rebuild their lost homes.

The President presented his plans in a 22-minute address from Jackson Square, in the heart of the French Quarter, with the white Cathedral of St Louis as his backdrop. He walked to the rostrum alone across the square, as if to symbolise how he in person was taking charge of what he termed "one of the largest reconstruction efforts the world has ever seen".

The government had failed to respond adequately to the calamity, Mr Bush said, admitting that Americans had "every right to expect" more effective action. Ultimately, he acknowledged, responsibility lay with himself, the man in charge of the federal government. He also spoke of the deprivation and poverty laid bare by the storm.

Speaking yesterday at the National Cathedral here during a service marking a National Day of Prayer overshadowed by the aftermath of the hurricane, Mr Bush sent the same message. Once more he referred to the social divisions and the legacy of the South's racial discrimination. As the debris was cleared away, "we must also clear away the legacy of inequality", the President declared.

There were, however, major omissions. The $62bn of emergency spending approved will soon run out, but Mr Bush gave no figure for how much more would be needed, indicating merely the federal coffers would provide it. Nor did he appoint a reconstruction "czar" to take overall charge of the relief effort, to co-ordinate the relief efforts.

"This government will learn the lessons of Hurricane Katrina," the President also promised, as he urged cities and communities across the country to make sure they were ready to cope with disasters, whether natural or man-made. Even before he spoke, however, the Republican-controlled Congress rejected Democratic demands for a bipartisan independent commission to investigate the disaster, similar to the one set up after the 9/11 terrorist attacks.

New Orleans in fact appears to be recovering faster than expected. Much of south-east Louisiana and the Mississippi coast are in ruins, but barring further rain, army engineers say the city itself will be completely drained by 2 October.Although tens of thousands of homes have been destroyed, fewer people appear to have died than had been feared. Katrina's death toll yesterday topped 800, almost three quarters of those fatalities in Louisiana.

Starting on Monday, residents will be allowed back into drier areas of New Orleans. The business district will be operating from next Saturday, and the French Quarter will reopen on 26 September.

A poll yesterday suggested, however, that half of those made homeless in the flood have no intention of going back.