RENO, Nev. -- President Bush declared part of northern Nevada a national disaster area Tuesday, making federal relief available to hundreds of people whose homes were swamped by a weekend levee rupture.

Bush signed the declaration as building inspectors went door to door in the town of Fernley to assess millions of dollars in damage from the flood, caused by a break in a century-old irrigation canal early Saturday.

The declaration makes available federal assistance, including grants for temporary housing and home repairs, the White House press office said. It also can be used to make low-cost loans to cover uninsured property losses and entails other programs to help individuals and business owners recover.

Floodwaters continued to drain in the fast-growing community 30 miles east of Reno.

City manager Gary Bacock said water in the hardest-hit areas was down to curb-high -- a big improvement but little consolation to residents who awoke Saturday to find water gushing into their homes.

Water collected 8 feet deep in some areas after a large swath of the earthen levee gave way and a 2-foot wave of water swamped the neighborhood. More than a dozen residents were rescued by helicopter from rooftops. Others were taken to safety by boats.

The canal is owned by the U.S. Bureau of Reclamation but managed by the Truckee-Carson Irrigation District.

That will make it difficult to determine liability, Jeff Page, Lyon County's emergency services director, told about 400 residents during a Monday night meeting.

"So that's going to be an issue, who is responsible for what, and that's an answer I don't know," Page said. "Hopefully when it comes time to fund it they will look at that it's a federal property and that will help push the directive to get done."

Bacock said teams of building inspectors, including volunteers from as far away as Las Vegas, were assessing nearly 600 homes to determine whether they were inhabitable. He said large trash bins are being placed along the streets so residents can dispose of the muck and trash.

Gov. Jim Gibbons on Saturday declared the area a disaster, the first step toward seeking a federal disaster designation. In his request to the White House, he included initial repair and cleanup estimates approaching $4 million, and indicated that follow-up assessments could push that total higher.

On Tuesday, Senate Majority Leader Harry Reid, D-Nev., said Homeland Security Secretary Michael Chertoff called him to pledge assistance to Nevada's flood victims.

"I greatly appreciate Secretary Chertoff taking the time to personally call me and promise that the people of Fernley will get everything they need in the wake of the levee break," Reid said.

The 31-mile-long canal takes water from the Truckee River near Reno and delivers it to farms around Fallon, 60 miles east of Reno.

A similar rupture in the same vicinity flooded 60 homes in December 1996.

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Associated Press writers Martin Griffith and Scott Sonner in Reno and Brendan Riley in Carson City contributed to this report.