The mayor of New Orleans says workers have made "significant progress" toward draining floodwaters from the hurricane-ravaged city.

Speaking at a news conference Tuesday, Mayor Ray Nagin estimated that 60 percent of the southern U.S. city is underwater, down from 80 percent a few days ago.

The mayor vowed to rebuild New Orleans, but urged people holding out against evacuation to leave, citing the health risk posed by fires, the polluted water, and disease-bearing mosquitoes.

Authorities have set up a huge morgue north of the city for the decomposed bodies being found as floodwaters recede. Officials have said they believe Hurricane Katrina killed thousands of people in the city, though at last count the Louisiana state death toll stood at 71.

The U.S. Army Corps of Engineers began pumping water out of New Orleans on Monday after repairing a key levee that broke during the storm and allowed the low-lying city to flood.

Officials say it may be three months before New Orleans is drained completely.

Hurricane Katrina also destroyed vast areas in the nearby state of Mississippi. The official death count there stands at about 150, but is expected to rise.