MEXICO CITY -- Hurricane Ernesto which made landfall on the tiny British Atlantic territory of Bermuda early Saturday was downgraded to a tropical storm by afternoon, according to the National Hurricane Centre.

The storm brought heavy rain and strong winds forcing residents to stay indoors and keeping more than 26,000 without power, officials said.

Bermuda power utility BELCO said that as of Saturday afternoon, more than 26,000 customers were out of power.

Earlier, the U.S. National Hurricane Centre warned of strong winds, a dangerous storm surge and significant coastal flooding.

It said some six to nine inches (150-225 millimetres) of rain was expected to fall on Bermuda. "This rainfall will likely result in considerable life-threatening flash flooding, especially in low-lying areas on the island," the centre said.

Due to the large size of the storm and its slow movement, hurricane-strength winds are expected to continue until Saturday afternoon, with tropical storm-strength winds continuing well into Sunday, the Bermuda government said. Ernesto is moving toward the north-northeast at around seven m.p.h. (11 km/h).

The Bermuda Weather Service confirmed the passage of the eye was from 5:30 am to 8:30 am local time in Bermuda. The eye expanded as it crossed Bermuda and they had lighter than expected winds.

The Minister said that the Emergency Measures Organisation (EMO) is receiving damage assessments as reports from overnight come into the Operations Group. They have not received any reports of any major damages yet.

The NHC reported life-threatening surf and rip currents on the east coast of the United States and said they would reach Canada during the day. The centre of Ernesto will slowly move away from Bermuda Saturday and pass near southeastern Newfoundland late Monday and Monday night, said the centre.

Lana Morris, manager of Edgehill Manor Guest House in Bermuda said that conditions are calm, though the wind has started to pick up again.

"I spoke to my guests, they told me they still have electricity, they have running water, and are comfortable."

Morris said she has been communicating with her guests via phone.

"They do not have internet -- but if the network is down, it's down. They are safe and I'm happy with that."

Bermuda is an archipelago of 181 tiny islands whose total land mass is roughly the size of Manhattan.

According to AccuWeather, it's uncommon for the eye of a hurricane to make landfall in Bermuda. It noted that, before today, since 1850 only 11 of 130 tropical storms that came within 100 miles (160 kilometres) of Bermuda had landfall.

The island is a renowned offshore financial centre with sturdy construction, and given its elevation, storm surge is not as problematic as it is with low-lying islands.

Ernesto previously battered the northeast Caribbean, where it left tens of thousands of people without water in Puerto Rico as the National Weather Service issued yet another severe heat advisory, warning of "dangerously hot and humid conditions."

LUMA, Puerto Rico's national power company said they have restored more than 1.3 million customers' electricity 72 hours after the passage of Ernesto. Hundreds of thousands of others were without water, as the National Weather Service issued yet another severe heat advisory, warning of “dangerously hot and humid conditions.”

"It's not easy," said Andres Cabrera, 60, who lives in the north coastal city of Carolina and has no water or power.

Hurricane Ernesto

Like many on the island, he could not afford a generator or solar panels. Cabrera said he was relying for relief only "on the wind that comes in from the street."

Officials said they hoped to restore power to 90 per cent of nearly 1.5 million customers in Puerto Rico by Sunday, but have not said when they expect power to be fully restored.

After a process of cleaning up and removing debris, The Virgin Islands Department of Education (VIDE) said that all public schools will resume operations on Monday.

Classes in Puerto Rico public schools also were scheduled to start Monday, nearly a week after their original date.

Ernesto is the fifth named storm and the third hurricane of this year's Atlantic hurricane season.

The National Oceanic and Atmospheric Administration has predicted an above-average Atlantic hurricane season this year because of record warm ocean temperatures. It forecast 17 to 25 named storms, with four to seven major hurricanes.