NEW YORK (Reuters) - The giant storm Sandy wreaked havoc on the New York City subway system, flooding tunnels, garages and rail yards and threatening to paralyze the nation's largest mass-transit system for days.

"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," Joseph Lhota, the chairman of the Metropolitan Transit Authority, said in a statement early on Tuesday.

He later said that water was "literally up to the ceiling" at one downtown station.

All seven subway tunnels running under the East River from Manhattan to Queens and Brooklyn took in water, and any resulting saltwater damage to the system's electrical components will have to be cleaned - in some cases off-site - before the system can be restored, MTA spokeswoman Deirdre Parker said on Tuesday.

At dawn, emergency crews were assessing the damage to tunnels and elevated tracks. Restoring the system is likely to be a gradual process, Parker said.

"It's really hard to say which areas will come back first," she said, adding it will likely be a combination of limited subway and bus service. "It will come back gradually."

It could be four to five days before subway service resumes, New York City Mayor Michael Bloomberg told a news conference on Tuesday. As for buses, the city is hoping to resume limited service on Tuesday and full service on Wednesday, he said.

About 5.3 million people use the city's subway system on weekdays. The system, which runs around the clock, comprises 21 subway routes linked by 468 stations, and stretches across 660 miles of track.

The MTA's Metro North Railroad lost power on its suburban Hudson and New Haven lines, while there was flooding in an East River tunnel used by the Long Island Rail Road, the agency said.

New Jersey's PATH commuter train service, which connects New Jersey with New York City, will likely remain suspended for at least a week to 10 days, New Jersey Governor Chris Christie said.

New York City closed down subway, bus and commuter train systems on Sunday night - a full day before Sandy, one of the biggest storms to ever hit the United States, made landfall on Monday night in neighboring New Jersey.

Sandy was especially imposing because of its wide-ranging winds. The storm brought a record storm surge of almost 14 feet to downtown Manhattan, well above the previous record of 10 feet during Hurricane Donna in 1960, the National Weather Service said.