The US Space Shuttle Columbia broke apart in a fireball as it returned to Earth on Saturday, killing all seven crew members and scattering debris over a wide area, NASA said.

Columbia disappeared from radar screens at 9am (0100 AEDT Sunday), 16 minutes before it was due to land. Several white trails of smoke were seen coming from bits of the shuttle over Texas .

National Aeronautics and Space Administration (NASA) chief administrator Sean O'Keefe said President George W. Bush had spoken with the families of the crew "to express deepest national regrets".

"This is indeed a tragic day for the NASA family, for the families of the astronauts who flew on Flight STS-107 and, likewise, tragic for the nation," O'Keefe told a news conference at the Kennedy Space Centre.

A NASA spokesman said hundreds of reports had been received of debris landing on the ground. The agency warned people not to touch anything they found, as the shuttle engines used highly toxic chemicals.

"The debris field is within the area of eastern Texas : Austin, Dallas, Forth Worth areas," said Beth Nischik, a spokeswoman for NASA at the Johnson Space Centre in Houston , Texas .

"At this time we don't know how big the recovery area is. We have received numerous calls regarding debris, people finding it, seeing it, people having debris in their yards."

The US president cut short a stay at the Camp David presidential retreat, where he was preparing the next stages in the showdown with Iraq , and returned to the White House to monitor events after the latest US space disaster.

The loss of Columbia , the oldest of the four US shuttles, brought back memories of the explosion of the Challenger shuttle as it took off from Cape Canaveral on January 28, 1986 , killing all seven people on board.

But there was no immediate suspicion that terrorism was involved in today's disaster, Federal Bureau of Investigation spokeswoman Angela Bell told AFP.

Columbia was commissioned in 1988 and was on its 28th mission. It had just returned from a major refit.

Columbia and the three other remaining shuttles were grounded for several months last year after tiny cracks were found in the hydrogen flow liners of their propulsion systems.

The shuttle was flying at 61,900 metres at about 20,100 kph when NASA declared what it called "a space shuttle contingency".

Bob Molter from Palestine , Texas , about 160km south of Dallas , told National Public Radio (NPR) how he saw the shuttle break up in the sky.

"There was a big boom that shook the house for more than a minute, and I went outside because I thought there had been a train accident on the nearby line.

"But there was nothing, and then I looked up and saw the trails of smoke zig-zagging, going across the sky."