A downgraded Hurricane Gustav packed with strong winds and heavy rains lashed the Gulf coast on Monday but spared New Orleans, the city which was devastated three years ago by Hurricane Katrina.

Gustav was downgraded from Category 3 to Category 2 storm as the wind speeds dropped to between 170 and 175 kilometers, which could still cause heavy destruction, Weather Services said.

Fearing a repeat of the 2005 Hurricane Katrina disaster, more than two million people fled their homes from coastal Mississippi, Albama and South-eastern Texas ahead of the storm, which was at one stage forecast to attain highest Category 5 before making the landfall.

Oil production platforms were shut down, the Republican Party suspended the start of its presidential election convention and President George Bush [Images] headed for his home in Texas to monitor preparations to meet any havoc caused by Gustav, which has killed more than 80 people in the Dominican Republic, Haiti and Jamaica.

Though New Orleans, which was evacuated and where only a few holdouts remain, was spared of direct hit, it could still see damaging flooding, officials said as they reviewed the preparations to provide relief to the victims.

"Hurricane force winds are moving on shore as we speak," Bill Read, director of the National Hurricane Center, said even though the centre of the storm was still some 130 km away.

Officials say the storm is capable of devastating the towns that come directly in its path and even perhaps in New Orleans.

The New York Times reported that the main road running across the coast from Louisiana to Alabama has already been closed because of surge.

Officials reported that some areas had already lost power but it could be hours before the effect of its impact is known.