Space shuttle Columbia broke up over Texas in a fiery display of debris Saturday morning as it entered the atmosphere for a scheduled landing, killing all seven crew members.

"The Columbia is lost, there are no survivors," said a sombre U.S. President George Bush.

"This day has brought terrible news and great sadness to our country," Bush said in afternoon statement from the White House.

"These men and women assumed great risk in the service to all humanity. The astronauts knew the dangers and they faced them willingly."

Video showed the shuttle re-entering the atmosphere over Dallas seemingly in one piece but multiple streaks were observed shortly after. Debris appeared to break off as the shuttle continued downward.

"We lost all vehicle data around 8 a.m. central time," said Chief Flight Director Milt Heflin. "Clearly we began to know we had a bad day."

From California to Texas to Louisiana, early risers, space buffs and passers-by watched as the shuttle came apart and took the lives of all seven astronauts aboard.

Chris Linville was working at Brookhaven Pet Hospital in Addison, north of Dallas, when he went outside a few minutes after 8 a.m. to watch the shuttle pass overhead.

"We went outside to see if it was landing. We saw a streak going across the sky. From the viewpoint we had, we did see some flames," said Linville, 21. "We knew it was flying over, and we were actually looking for the shuttle passing by. We had no idea."

Patricia Hernandez was on her way home to Palestine in east Texas after going to a funeral. She saw a "fire in the sky ... like the sky was falling."

Pieces of debris and human remains were discovered throughout central Texas and western Louisiana, with a large piece discovered in a scorched field in Nacogdoches County, Texas. NASA warned that any debris found could be hazardous and should be avoided.

In Hemphill, near the Louisiana state line, hospital employee Mike Gibbs found what appeared to be a charred torso, thigh bone and skull on a rural road.

"I wouldn't want anybody seeing what I saw," Gibbs said. "It was pretty gruesome."

Shuttle program director Ron Dittemore said all future missions will be put on hold until the cause of Columbia's breakup is determined.

NASA administrator Sean O'Keefe called the accident "a tragic day for the NASA family, the families of the astronauts and tragic for the nation."

Columbia was at an altitude of about 61,170 metres, travelling at about 20,000 km/h when mission control lost contact. There was no further communication and no further tracking data.

NASA launched a search and rescue operation in the Dallas and Fort Worth area. The shuttle, with a crew of seven, was en route to Florida for a scheduled landing at 9:16 a.m. ET.

O'Keefe said he called U.S. President George Bush shortly after the shuttle missed its planned landing time.

He said Bush later telephoned the families of the astronauts to offer his condolences. The wives, husbands and children of the astronauts who had been waiting at the landing strip were earlier gathered together by NASA and taken to secluded place.

Marc Garneau, the first Canadian in space and current president of the Canadian Space Agency, said he knew all of the astronauts "very well."

"This is the day you come to dread but you always know it may occur," Garneau said. "It's just part of the risk you accept when you become a shuttle astronaut."

In 42 years of human space flight, NASA had never lost a space crew during landing. In 1986, space shuttle Challenger exploded shortly after liftoff.

The crew included Israel's first astronaut.

Ilan Ramon, a colonel in Israel's air force and former fighter pilot, became the first man from his country to fly in space, and his presence resulted in an increase in security, not only for Columbia's launch, but also for its planned landing.

Space agency officials feared his presence might make the shuttle more of a terrorist target.

But O'Keefe said there was "no indication this was caused by anything on the ground."

Columbia's crew had completed more than 80 scientific research experiments during their time in orbit.

Only two of the seven astronauts had flown in space before, the shuttle's commander, Rick Husband, and Kalpana Chawla. The other five were rookies: pilot William McCool and Michael Anderson, David Brown, Laurel Clark and Ramon.

"The government of Israel and the people of Israel are praying together with the entire world for the safety of the astronauts on the shuttle Columbia," said a statement from the office of Israeli Prime Minister Ariel Sharon. "The state of Israel and its citizens are as one at this difficult time."

On Jan. 16, shortly after Columbia lifted off, a piece of insulating foam on its external fuel tank came off and was believed to have struck the left wing of the shuttle.

Leroy Cain, the lead flight director in Mission Control, assured reporters Friday that engineers had concluded that any damage to the wing was considered minor and posed no safety hazard.

Columbia, the oldest shuttle in the U.S. space fleet, was on its 28th mission. The craft was designed to complete 100 missions. Overall, Columbia was conducting the shuttle program's 113th flight.

With reports from Associated Press and CTV News.