US President Barack Obama has declared a "major disaster" in New York state after storm Sandy smashed into the US East Coast, causing flooding and cutting power to millions.
A record 4m (13ft) tidal surge sent seawater cascading into large parts of New York City's subway system.
Across the city, a power sub-station exploded, a hospital was evacuated and fire destroyed 50 homes.
At least 15 people are reported dead across several US states.
In northern New Jersey, a rescue operation is reported to be under way after a levee broke and flooded the town of Moonachie.
Bergen County chief of staff Jeanne Baratta told CNN: "Moonachie has been devastated. Every street has got four or five feet of water on it."
An estimated 50 million people could be affected by the storm, with up to a million ordered to evacuate homes.
Sandy, now downgraded from a hurricane but described as a "super-storm", is churning north heading for Canada.
Over the past week Sandy has killed more than 80 people as it carved a path of destruction through the Caribbean.
'Devastating'
The storm made landfall close to Atlantic City in New Jersey at about 20:00 local time (midnight GMT), with winds of more than 80mph (129km/h).
It collided with cold weather fronts from the west and north to create what some forecasters have dubbed a "Frankenstorm".
Much of Atlantic City was under water and 30,000 residents were evacuated.
In New York City, parts of Lower Manhattan were quickly inundated as the Hudson and East rivers overflowed. Seawater poured into road tunnels and the subway system. Images showed cars being swept along streets by the torrent.
"The New York City subway system is 108 years old, but it has never faced a disaster as devastating as what we experienced last night," city transport director Joseph Lhota said early on Tuesday.
City officials had earlier ordered some 375,000 residents out of Lower Manhattan and other areas under threat.
"Lower Manhattan is being covered by seawater," Howard Glaser, director of operations for the New York state government, was quoted as saying. "I am not exaggerating. Seawater is rushing into the Battery Tunnel."
Battery Tunnel links Manhattan with Long Island.
The city's Consolidated Edison utility provider said an explosion at a sub-station, probably caused by flooding or flying debris, blacked out much of Lower Manhattan.
The company said about 500,000 homes in Manhattan were without power.
As dawn broke, residents emerged to see the havoc wreaked by the storm.
In other developments:
- Fire has destroyed about 50 homes in the New York City borough of Queens.
- More than 200 patients were evacuated from New York University's Tisch Hospital after power went out and a backup generator failed.
- America's oldest nuclear power plant, Oyster Creek in New Jersey, was put on alert due to rising water, the Nuclear Regulatory Commission said.
- The New York Stock Exchange will stay shut on Tuesday - the first time it has closed for two consecutive days due to weather since 1888.
- A crew member from a replica of HMS Bounty has died and the captain is missing after the ship sank in mountainous seas off North Carolina on Monday.
New York Mayor Michael Bloomberg said the storm surge was higher than the highest forecast, but he expected waters to start receding.
SANDY HITS EAST COAST
- At least 13 people dead, including one in Canada
- 1m ordered to leave their homes
- 50m people estimated to be affected, with 5m left without power
- 800-mile (1,290 km) stretch of the US affected
- 10,000 flights reported grounded globally on Monday and Tuesday
- Manhattan hit by record storm surge of 13.7ft (4.15m) on Tuesday morning
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