Mayor Ray Nagin said the levees breached by the August 29 superstorm were still too weak to withstand a new beating as Tropical Storm Rita strengthened and headed for the US coast from the Atlantic.
“We are suspending all re-entry into the city of New Orleans as of this moment,” Mayor Nagin told reporters.
At the same time, authorities in Florida ordered the evacuation of several islands in the Keys chain off the south coast because of Rita.
The storm could hit the Gulf coast by Thursday and Nagin warned people who have already returned to be ready to evacuate again.
His decision to let some 180,000 residents return by the end of the month had drawn criticism from federal authorities.
President George W Bush warned on Monday against allowing people to rush back to the city devastated by floods caused by Katrina.
More than 950 people were killed by the storm and floods and only a few families had re-entered New Orleans on Monday as relief crews raced to restore power, water and sewage pipes wrecked by Hurricane Katrina.
Government leaders had criticised Nagin’s scheme as too ambitious because New Orleans remains unsafe.
Some districts remain under water, and most of the others lack clean water and a reliable power supply and there is also a high health risk.
Mr Bush, who was to visit the region again this week, signalled his own concern, telling reporters in Washington “we’re cautious about encouraging people to return at this moment in history.”
“It’s just a matter of timing, and there’s issues to be dealt with,” Mr Bush said.
Mayor Nagin defended his plan however, saying “my thought has always been that if we have this many resources in the city, working cooperatively, then we can correct just about any situation that was out there.
“But now we have conditions that have changed,” he said. “We have another hurricane that’s approaching us.”
On top of the hundreds killed, around one million people left their homes and around 100,000 are still living in shelters.
As for the economic cost, estimates of the final tab remain speculative, with some figures in the region of US$200 billion.