The National Hurricane Center upgraded Katrina to a category five storm, the top grading on the Saffir-Simpson scale, as television footage showed highways out of New Orleans jammed with cars and vehicles fleeing the city.

"Katrina (is) now a potentially catastrophic category five hurricane headed for the northern Gulf Coast," the center warned in a bulletin.

It said the hurricane warning was in effect for the north central Gulf Coast from Morgan City, Louisiana, east to the Alabama and Florida borders, including the city of New Orleans and Lake Pontchartrain.

The massive storm -- packing winds near 160 miles per hour (257 kilometers per hour) -- could hit those areas within the next 24 hours, the center said.

"That's now a catastrophic hurricane," Chris Cisco, an expert with the National Hurricane Center, told AFP.

At 1200 GMT, the center of the huge storm system was located about 250 miles (400 kilometers) south-southeast of the mouth of the Mississippi river, moving west-northwest at 12 miles per hour (19 kilometers per hour).

President George W. Bush has issued a state of emergency in Louisiana, clearing the way for federal aid to those affected. Louisiana Governor Kathleen Babineaux Blanco ordered mandatory evacuations of low-lying areas.

The authorities in New Orleans, which lies below sea level, warned residents to take their warnings seriously and to seek shelter immediately.

"We want you to take this very seriously," New Orleans Mayor Ray Nagin said. "This not a test. This is the real deal. And I don't want to panic you but I wanted to make sure you understand that there is a major hurricane that is in the Gulf of Mexico."

Nagin said authorities were preparing to order an evacuation of all 485,000 residents of the low-lying city by early Sunday, and were planning to open the massive Superdome sports stadium as an emergency shelter for those who cannot get out.

About 1.3 million people live in the greater New Orleans area.

Twenty-one oil rigs and platforms in the Gulf of Mexico had already been evacuated in anticipation of the hurricane, fueling concerns over oil prices, which already soared to record highs Thursday.

Shell announced Friday it had evacuated the first 146 people from its offshore facilities, but stressed that this had not had an impact on production.

Katrina has already been blamed for seven deaths after it slammed ashore late Thursday in southern Florida, flooding entire neighborhoods, uprooting trees and leaving more than a million people without electricity.

Utility company crews battled to repair power lines after the storm knocked out power in about 1.4 million Florida homes.

Authorities warned that with downed lines lying in flooded streets, the danger was not over for residents of affected areas.

Most hurricane fatalities typically occur after the storm has passed, often as a result of floods or fallen power lines.

"We do not want people to let their guard down. That's when we have the greatest number of deaths," said Craig Fugate, who heads Florida's emergency operations.

The storm also put a damper on the MTV Video Music Awards, causing the cancellation of glitzy concerts and parties planned ahead of the main event.

But organizers remained confident that Sunday's awards ceremony in Miami would go ahead as planned, and the event's website showed fashion shots of celebrity hosts and nominees getting soaked.

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