Troops rescued more people from storm-flooded homes on Thursday and millions remained without power along the US East Coast even as New York struggled back to life with the first subway trains rolling in four days.

The US death toll from Hurricane Sandy rose to at least 85 as New York reported a major jump in fatalities caused by Monday's storm. Fuel shortages led to long lines of cars at gasoline stations in many states and the country faced a storm bill of tens of billions of dollars.

Despite a huge cleanup operation after the devastating storm, major difficulties remained along the East Coast, particularly in New Jersey.

National Guard troops were still helping to get people out of flooded homes in Hoboken, across the Hudson River from New York, a Guard spokesman said. "We are still doing search and rescue operations across the state," the spokesman said.

Hoboken authorities estimated on Wednesday that 20,000 people were stuck in their homes and high-wheel military trucks were brought in to reach stricken houses and apartment blocks.

The floodwaters receded slowly, leaving desolation on Thursday. A yacht, thrown up by the storm, blocked one street near the Hoboken ferry terminal.

New Jersey, where President Barack Obama went Wednesday, emerged as the state with the most widespread destruction. At least 12 people were reported dead in the state, and many isolated districts were still being searched.

Some 1.8 million people in New Jersey were still without electricity three days after the storm and fuel shortages were becoming critical, with huge queues of cars at the rare gas stations open in the state.

The first subway trains brought some cheer to New York City, but difficulties remained significant with Con Edison power company saying that about 650,000 thousand people in the city were still without power.

Con Edison spokesman Alfonso Quiroz promised that more than 200,000 Manhattan customers blacked out by an explosion at a sub-station would have power by Saturday morning.

New York authorities handed out ice across the city to help people preserve food.

A skeleton metro service started just before dawn and trains were quickly packed. Train fees were waived on Thursday and Friday. "It is not comfortable but it is a huge relief to get moving again," said commuter Dave Stetman.

In a bid to avoid gridlock traffic jams that hit Manhattan on Wednesday, Mayor Michael Bloomberg said cars entering the island must have at least three occupants. Police set up checkpoints at bridges on Thursday and turned back hundreds of cars.

Police said the New York City death toll from Sandy in the city had risen from 24 to 37. At least 85 people have now been reported dead along the 15 eastern states hit by Sandy.

The overall toll from the storm thus went up to 157, including fatalities in Canada and the Caribbean, where Haiti and Cuba were hit particularly hard.

In New York the majority of those killed were hit by trees that fell on their homes or cars as the storm whipped into the city.

But some heartbreaking stories emerged from the storm.

Two brothers, aged two and four, were swept from their mother's arms in the floods as the family tried to escape the rising seas in Staten Island in the New York suburbs.

Glenda Moore's car became stuck in the water and she was carrying the boys to seek help when they were swept away, the New York Post said. Police said they were still looking for the boys, Connor aged four and Brandon aged two.

Others victims were electrocuted or drowned in flooded basements. A growing number of people were killed in by poisoning from diesel generators put into use since the storm.

The Shell oil company said that Sandy triggered an oil spill in the waters off New York and said clean up efforts were under way.

The US Coast Guard, which is overseeing the clean-up, said refinery operator Motiva had estimated up to 300,000 gallons of diesel fuel had leaked from the plant at Sewaren, New Jersey.

"At least two diesel storage tanks were damaged and an unknown quantity of product was released," Shell said in a statement.