New Orleans Mayor Ray Nagin has suspended a plan for residents to return to the city devastated by Hurricane Katrina three weeks ago.
Algiers became the first district to re-open to residents
He said that, with a new tropical storm menacing the southern US coast, the "conditions have changed".
The city's Algiers section has already opened and Mayor Nagin had plans to open three more district shortly.
But President Bush and top officials have voiced concern at the stricken city's ability to cope with the influx.
Mayor Nagin told a press conference that "all re-entry" to the city was being suspended immediately.
"The conditions have changed. We have another hurricane approaching us," he said.
Tropical Storm Rita is building in strength as it heads towards the Florida Keys and could become a hurricane.
Its predicted path would take it to Texas - where many of Hurricane Katrina's victims have sought refuge - at the weekend, and some maps suggest it may hit parts of Louisiana.
On Monday, the number of confirmed deaths in Louisiana as a result of the storm climbed by 90 to 736, taking the death toll across the region to 973.
'Matter of timing'
Earlier, Coast Guard Vice-Admiral Thad Allen, head of the recovery effort, warned that the threat of more storms complicated plans to re-open the city.
"Whatever population goes into New Orleans right now, there has to be an evacuation plan on how to get them out in the event of another hurricane," he said, speaking on US television station CBS.
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Speaking after a meeting with his Homeland Security Council, President George W Bush said his administration was "cautious about encouraging people to return at this moment of history".
He stressed that the city needed to re-emerge, but it was "a matter of timing".
"The mayor has got this dream about having his city up and running," said Mr Bush. "We share that dream, but we also want to be realistic about some of the hurdles and obstacles."
Mayor Nagin had said he wanted to allow residents to return to New Orleans one postcode at a time.
He had announced plans for the Uptown neighbourhood, the Garden District and the historic French Quarter to be re-settled over the next week - bringing a third of New Orleans' evacuated inhabitants back to the city.
Residents of Algiers, a district of 57,000 people which escaped the worst of the damage, became the first to be able to return on Monday.
The BBC's Oliver Conway described how they were returning to homes with running water and electricity - although food and water was being supplied by a relief station run by the army and volunteers.
Mayor Nagin has now urged those who returned to Algiers to be ready to evacuate as early as Wednesday.