The rocket’s upper stage dramatically broke up and disintegrated over the Caribbean after launching from Texas on Thursday, forcing airline flights to alter course to avoid falling debris.

The US Federal Aviation Administration (FAA) said it was working with SpaceX and other authorities to confirm reports of damage to public property on the Turks and Caicos Islands. There were no reports of injuries.

Elon Musk’s company has been told to carry out a “mishap” investigation by the aviation regulator, which will review the findings before deciding if Starship can return to flight.

The FAA confirmed it had activated a “debris response area” to briefly slow aircraft outside the area where debris was falling, or stop aircraft from leaving their departure locations.

It added that several aircraft asked to divert due to low fuel levels while being held outside the affected area.

Starship is the biggest, most powerful rocket ever built, and is key to Musk’s ambitions of colonising Mars.

Thursday’s uncrewed launch was Starship’s seventh test mission, and the first involving a taller, upgraded version of the rocket.

The Starship upper stage, two metres (6.56 ft) taller than previous versions, was a “new generation ship with significant upgrades”, SpaceX said before the test.

It was due to make a controlled splashdown in the Indian Ocean roughly an hour after its launch from Boca Chica, Texas.

The Starship system lifted off at 17:38 EST (22:38 GMT) and the upper stage separated from its Super Heavy booster nearly four minutes into flight as planned.

But then SpaceX communications manager Dan Huot reported on a live stream that mission teams had lost contact with the ship.

The Super Heavy booster managed to return to its launchpad roughly seven minutes after lift-off as planned, prompting an eruption of applause from ground control teams.

SpaceX later confirmed the upper stage had undergone “rapid unscheduled disassembly”.

In a post on his social media platform X, Musk said “preliminary indications” were that the problem was linked to an “oxygen/fuel leak in the cavity above the ship engine firewall”.

The billionaire added that “nothing so far suggests pushing next launch past next month”.

SpaceX’s Starship spacecraft and Super Heavy rocket – collectively referred to as Starship – is 123m (403ft) tall and is intended to be fully reusable, the company says.

Nasa hopes to use a modified version of the rocket as a human lunar lander for its Artemis missions to return to the Moon.

In the more distant future, Musk wants Starship to make long-haul trips to Mars and back – about a nine-month trip each way.

The Starship test launch on Thursday came hours after the first flight of the Blue Origin New Glenn rocket system, backed by Amazon boss Jeff Bezos.

It was a huge step forward for Bezos and his company that has spent years getting to the point of sending a rocket into orbit.

Bezos and Musk both want to dominate the space vehicle market.

Officials at Elon Musk’s company said the upper stage was lost after problems developed after lift-off from Texas on Thursday.

The mission came hours after the first flight of the Blue Origin New Glenn rocket system, backed by Amazon boss Jeff Bezos.

The two tech billionaires both want to dominate the space vehicle market.

Starship experienced a rapid unscheduled disassembly during its ascent burn. Teams will continue to review data from today’s flight test to better understand root cause,” SpaceX posted on X.

“With a test like this, success comes from what we learn, and today’s flight will help us improve Starship’s reliability.”

Unverified footage on social media shows what appears to be the rocket breaking up in flames.

“Success is uncertain, but entertainment is guaranteed!” Mr Musk posted on X, sharing footage of the launch’s aftermath.

He also said “improved versions” of the ship and booster were “already waiting for launch”.

“Preliminary indication is that we had an oxygen/fuel leak in the cavity above the ship engine firewall that was large enough to build pressure in excess of the vent capacity,” Musk said a short while later, adding that “nothing so far suggests pushing next launch past next month”.

Footage of the launch clocked up 7.2m views, according to a SpaceX livestream.

The Starship system had lifted off from Boca Chica, Texas, at 17:38 EST (22:38 GMT) in the company’s seventh test mission.

The Starship upper stage separated from its Super Heavy booster nearly four minutes into flight as planned.

But then SpaceX Communications Manager Dan Huot reported on a live stream that mission teams had lost contact with the ship.

The Super Heavy booster managed to returned to its launchpad roughly seven minutes after lift-off as planned, prompting an eruption of applause from ground control teams.

The US Federal Aviation Administration (FAA) said it was aware “an anomaly occurred” during the SpaceX mission.

“The FAA briefly slowed and diverted aircraft around the area where space vehicle debris was falling. Normal operations have resumed,” it said in a statement.

It comes a day after a SpaceX rocket blasted off from Florida carrying two privately constructed lunar landers and a micro rover to the Moon.

The uncrewed Falcon 9 launched from the Kennedy Space Center on Wednesday.

And Bezos’ Blue Origin company successfully launched a rocket into orbit for the first time.

It was a huge step forward for Bezos and his company that has spent years getting to the point of sending a rocket into orbit.