CORPUS CHRISTI, Texas (AFP) - Hurricane Dolly pounded the Texas-Mexico border region on Wednesday with rain and powerful winds, flooding part of a Mexican city where 250,000 people were left without drinking water.

The storm made landfall in South Padre Island, Texas, as a category two hurricane packing winds of 160 kilometers (100 miles) per hour, the National Hurricane Center said.

But Dolly lost some punch as it interacted with the cooler land mass after leaving the Gulf of Mexico, downgrading to a category one storm with 150 kph (95 mph) winds soon after making landfall.

By 2100 GMT, Dolly's winds fell to 140 kilometers (85 miles) per hour, as it moved northwest 80 kilometers (50 miles) from the Texas border town of Brownsville.

While still a category one storm, "further weakening is forecast during the next 24 hours," the NHC said.

As pounding rain and strong winds battered the US-Mexico coast, authorities worried whether levees could sustain the flood waters.

Bracing for as many as 15 inches (38 centimeters) of rain, residents boarded up windows and piled up sandbags and thousands fled for safer ground.

In Matamoros, 60 kilometers (37 miles) south of South Padre Island, Dolly's winds damaged the city's main water treatment plant, leaving half of the 500,000 inhabitants without drinking water, while heavy rain triggered extensive flooding, local officials said.

Texas Governor Rick Perry issued disaster declarations in 14 counties across the southern portion of the state, and hundreds of National Guard troops and other emergency crews were deployed in advance of the storm.

White House spokeswoman Dana Perino said federal authorities were helping with hurricane preparations.

"We've been identifying resources and pre-positioning supplies in case they are needed after the landfall," she told reporters in Washington.

As the storm made landfall, the NHC warned that isolated tornadoes could hit south Texas and there could be "widespread flooding across portions of south Texas and northeast Mexico."

As Dolly weakened over southern Texas, hurricane warnings were replaced by tropical storm warnings in many areas north and south of the US-Mexico border.

The first hurricane of the season in the Gulf of Mexico prompted some oil companies to evacuate personnel from their offshore rigs, but by early Wednesday the storm looked set to bypass the major oil producing areas.

However, concerns were raised about the ability of levees to withstand the floodwaters, which could go as high as three feet (one meter) in southern Texas's Cameron County, officials told the local Brownsville Herald.

"I ask that any residents that live near the levee in Cameron County to please move away from the river levees near the Rio Grande River. We believe those will be breached if the path continues," said Johnny Cavazos, emergency management coordinator for the county.

Authorities called for the evacuation of more than 23,000 people from coastal areas in the Mexican state of Tamaulipas, Governor Eugenio Hernandez said.

The NHC has forecast an especially active 2008 weather season, saying there could be up to nine hurricanes and 12 tropical storms in the Atlantic region. The Atlantic hurricane season runs from June 1 through the end of November.

About 35 million people live in the most hurricane-prone US region, the southeastern coastline running from the states of North Carolina to Texas, according to the US Census Bureau.

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