New Orleans will begin to reopen to businesses this weekend and the first residents will be allowed to return to their homes on Monday, Mayor Ray Nagin (search) told reporters Thursday.

"The city of New Orleans ... will start to breathe again. It will have life, it will have commerce," Nagin said.

Nagin outlined a plan for 182,000 residents to return to their neighborhoods over the next 10 days. Businesses can return this weekend in the central business district, Algiers, the French Quarter and in uptown.

"It's a good day in New Orleans," Nagin said. "The sun is shining. We're bringing New Orleans back."

The first section to reopen to residents will be Algiers, across the Mississippi River from the French Quarter, on Monday, the mayor said. The city's Uptown section, which includes Tulane University and the Garden District, will be reopened in stages next Wednesday and next Friday, he said. The French Quarter (search) will follow on Monday, Sept. 26.

"The French Quarter is high and dry, and we feel as though it has good electricity capabilities," the mayor said, "but since it's so historic, we want to double- and triple-check before we fire up all electricity in there to make sure that because every building is so close that if a fire breaks out, we won't lose a significant amount of what we cherish in this city."

Government tests released Wednesday found dangerous amounts of sewage-related bacteria in the floodwaters, along with lead from unknown sources and high levels of industrial chemicals such as arsenic. But tests of the city's foul-smelling air found no significant health risks.

The floodwaters continued to recede on the city's hard-hit east side, revealing a pathetic scene: Block after block of once-flooded neighborhoods covered in a slimy, putrid muck and dotted with ruined cars, snapped utility poles and collapsed houses.

The Coast Guard and other rescue teams kept up the search for bodies by boat and helicopter in areas that were still under several feet of water. A few homes in the area bore spray-painted marks indicating that bodies were inside.

The death toll in Louisiana climbed to 474 on Wednesday, and it was expected to rise further as state and federal officials went about the monumental task of collecting the bloated and decayed corpses and identifying them through DNA. The total death toll across five states reached 710.

Identifying the dead is "going to take months, maybe years," said Dr. Louis Cataldi, the coroner for Baton Rouge Parish. "This is not going away."

President Bush planned to make a prime-time address from New Orleans on Thursday to offer new federal spending for helping hurricane victims rebuild their lives.

The most obvious sign of progress has been the lights flickering back on. About 168,000 customers were still without power in the New Orleans area, mostly in places still flooded, but the number has been going down.

The Hibernia Corp., Louisiana's oldest bank, whose landmark building was once the city's tallest, turned on its lights at sunset Wednesday. The bank is well known for the colors that light up the building's cupola during the holidays.

About 40 percent to 50 percent of the city was still flooded, down from 80 percent after Katrina hit, as pumps worked to siphon off 8 billion gallons a day.

The mayor said that the post-Katrina New Orleans would be even better than before.

"Imagine building a city so original, so unique, that everybody's going to want to come," said Nagin.

In Baton Rouge Wednesday, Gov. Kathleen Blanco (search) echoed Bush's words from a day earlier, taking responsibility for missteps in the immediate response to Katrina.

"We all know that there were failures at every level of government: state, federal and local," Blanco told lawmakers in a special meeting of the Louisiana Legislature. "The buck stops here, and as your governor, I take full responsibility."

Also Wednesday, the state attorney general's office said all of its investigators have been pulled from other tasks to work on the Medicaid Fraud Unit (search), the team whose work led to negligent homicide charges against the husband-and-wife owners of a Chalmette nursing home where 34 elderly residents died during the storm.

Kris Wartelle, a spokeswoman for Attorney General Charles Foti, said the office has been besieged with allegations of neglect that may have led to injuries or deaths at other nursing homes and hospitals.

Recovery efforts continued in Mississippi, where Gov. Haley Barbour said officials would offer some evacuees room aboard a small cruise ship moored off the Gulf coast.

Barbour called the lack of temporary housing for evacuees the state's largest problem, but he did not provide a timetable or other details about the 490-passenger vessel.

"This is a small solution," Barbour told a news conference. "We are going to look at base camps and modular cities, if you will. But I just want to say to you we are not where we need to be on temporary housing."

He said about 2,000 travel trailers and mobile homes are en route to storm-damaged areas of Mississippi but most are still in staging areas, and fewer than 250 were ready for occupancy.

In Washington, Senate Republicans scuttled an attempt by Sen. Hillary Clinton to establish an independent, bipartisan panel patterned after the 9/11 Commission to investigate what went wrong with the government's response to the hurricane.

Separately, a Senate committee opened a hearing on the disaster, with the panel's Republican chairwoman saying that changes instituted after Sept. 11 in the government's emergency-preparedness failed their first major test during Katrina.

The Associated Press contributed to this report.