The SpaceShipTwo plane, which is designed to carry passengers on the world's first commercial space flights, reportedly exploded after being dropped from a conventional airplane at 45,000ft.
One pilot managed to parachute out of the vessel during the disaster, and is now in hospital with serious injuries. The other was confirmed dead by authorities.
Today's flight was the first time SpaceShipTwo had taken to the skies using a new, solid plastic fuel instead of the rubber-based propellant which powered earlier flights. Virgin founder Richard Branson is flying urgently to the scene of the accident.
Parts of the crashed spacecraft in the Mojave desert. SpaceShipTwo was flying under rocket power after being released from its mothership - then Virgin tweeted that it had 'experienced an in-flight anomaly.'
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