John Ferguson, who is still rebuilding his house almost 18 months after the storm, said of the celebration: "We never needed it more. "I work all day at my job, then I work all night and all weekend on my house. I just want to eat, drink and have fun today," Ferguson said.

Many spectators spent the day along the parade routes or in the French Quarter, where the first Mardi Gras parade of the day was staged by the 1,250-member Zulu Social Aid and Pleasure Club, a predominantly black group that wears grass skirts and blackface makeup in parody of stereotypes from the early 1900s, when it was founded.

"I'm hyped up," said Ike Williams, a 42-year-old Atlanta contractor who is black. He wore frizzy black wig and a grass skirt as he marched in his first parade as a member of Zulu's Walking Warriors. "I couldn't sleep last night. This is the centre of the universe right now."

Earlier in the day, Mayor Ray Nagin rode a horse down St. Charles Avenue.

"We're going to make it happen," Nagin told the crowd at Gallier Hall, which served as city hall for over a century. "We're going to rebuild this city regardless."

Nagin urged tourists to spend money. "We need the tax revenue bad," he said.

Parade watcher Chris Williams pointed and shouted to the mayor, who returned the greeting.

"He's a good guy. One of the good few," said Williams, 27, who said he and his fiancee are trying to rebuild their hurricane-flooded house but are still renting because of insurance problems.

Fat Tuesday - Mardi Gras - is the climax of the Carnival season that began on Jan. 6. After Mardi Gras comes Ash Wednesday and Lent.

The crowds appeared larger than last year, when an estimated 700,000 people were in the city for the final weekend and Mardi Gras. The city's 30,000 hotel rooms were 95 per cent occupied, according to Fred Sawyers, president of the Greater New Orleans Hotel and Lodging Association.

Along some parade routes, crowds listened to Pete Fountain's Dixieland jazz as his Half Fast Marching Club kicked off the day. It was the 46th time the Grammy-winning clarinetist had made the march from Commander's Palace restaurant in the uptown section to the Mississippi River.

"This is like old times," said Fountain, 76, who lost his house along with his gold records and collection of instruments in the hurricane. "New Orleans will always get ready for a party."

Corinne Branigan, 40, wore a brown T-shirt with the slogan, "New Orleans. Established 1718, Re-established 8-29-05," referring to the date Katrina struck the city.

"This is everything that's great about New Orleans rolled into three days," Branigan said. "Food, music - we've got the best marching bands in the country. It's like a big neighbourhood. Everything else is forgotten for the time being."

In the French Quarter, the celebration was more raucous as revellers swapped flashes of flesh for beads tossed from balconies.

Costumes ranged from the glamorous to the satirical.

Judy Weaver, 49, and R.M. Elfer, 50, wore nuns' habits with camouflage capes as the Angry Little Sisters of the Apocalypse. They carried rulers bearing the slogan "weapons of mass instruction," and what they called novena bombs - originally, toilet floats - and rapid-fire rosaries.

"We are cleaning up crime in the city," said Weaver.

Last year's festivities were scaled down - fewer parades and only about 13,000 hotel rooms available, compared with this year's 30,000 rooms.

"The weekend was surprisingly busy," said Earl Bernhardt, co-owner of two bars and a blues club in the French Quarter. "The crowd is bigger and they're spending a lot of money."

Three parades rolled Monday night, including Orpheus, the glitzy parade founded by singer Harry Connick Jr. Actress Patricia Clarkson and New Orleans Saints coach Sean Payton were celebrity monarchs.

Big crowds lined the parade routes beginning late last week and continued through Monday night. Bourbon Street also was packed with revellers.

"We haven't paced ourselves at all," said Tracy Brown, 25, of Dallas. "We got here Saturday and I think we've only had about three hours of sleep since then."

The Canadian Press, 2007