BBC Correspondent Daniela Relph reports from the project control centre

But his flight control centre in London has told the BBC that Branson and his co-pilots are defying the order and continuing their flight.

A spokeswoman at the British Embassy in Beijing, confirmed that the Chinese had asked the balloon to land at Lhasa Airport but she said the balloon had been unable to do so.

The balloon is now drifting over eastern Tibet - some of the most inaccessible terrain in the world - and it is too dangerous to put down, especially because night is falling, say flight controllers.

The BBC's Carrie Gracie: "No accidental shooting down of the balloon"

The balloon is currently 250 miles north of an approved "corridor" in China and is violating restricted airspace.

Chinese Foreign Ministry spokesman Zhu Bangzao warned that "China will not take responsibility for the consequences" if the record attempt continues on its present course.

"This balloon violated an agreement reached by the two sides and changed course," Zhu said.

British diplomats in Beijing are reported to be conducting intense negotiations with the Chinese side to try to allow the balloon to continue its mission.

In February, China withheld permission for a European balloon team to fly through its airspace, which forced the crew to land and end their round-the-world bid.

China had authorised the Virgin tycoon's balloon - which can only be steered to a limited degree - to fly over its territory as long as it heads south of the 26th parallel.

BBC Correspondent Geeta Guru-Murthy: The Balloon crossed into Chinese airspace 250 miles off-course

The balloon crossed the Himalayas further north than planned due to diversions around violent Mediterranean storms and air strikes on Iraq.

If Branson's record attempt continues on its existing "track" it will fly into crowded airspace and may become a danger to civil air traffic.

China has stressed, however, that it would not be shot down. However, it said it regretted that the crew had failed to follow its instructions and said it would not take responsibility for the consequences.

Piloted by Branson, American Steve Fossett and Sweden's Per Linstrand, the balloon crossed from Nepal into Chinese-ruled Tibet just before 2200 GMT on Monday.

China had initially given permission for the balloon to travel in its airspace south of 26 degrees north latitude.

The BBC's Andrew Bomford explains the latest developments

Project director Mike Kendrick said Chinese air-traffic controllers were informed the moment the balloon passed over the border, with an apology added to the communication.

The balloon team is continuing to contact them every 15 minutes to keep the Chinese informed about their position.

Mr Branson: Defying Chinese order

"We are in someone else's airspace without permission - it is not a nice place to be," he said.

But Mr Kendrick added that the long journey across China was an inescapable part of any round-the-world bid.

"If we don't go through China, we don't do a global flight," he said. "We have to go through China - that is the bottom line. All I'm hoping is that we can stay in the air for long enough."

As it became inevitable that the balloon would enter Chinese territory, the UK Government, and later the United States, started diplomatic negotiations.

Prime Minister Tony Blair contacted his counterpart Zhu Rongji asking for China's help, the British Embassy official said.

But a spokeswoman for China's defence ministry, which is in charge of the country's airspace, said she had never heard of Branson or the balloon.

Personal record

On Sunday, Mr Branson and Mr Lindstrand broke their personal duration record of 48 hours set during their record-breaking 1991 crossing of the Pacific in a hot air balloon.

The current track, if it is allowed to progress, will take the balloon straight over England, meaning Mr Branson could fulfil his dream of landing in his Oxfordshire garden.

It is also due to fly over San Francisco on Christmas Day before completing the round-the-world journey on New Year's Eve or New Year's Day.

The crew have already had several hair-raising moments that threatened to scupper their bid for the last great prize in aviation.

'Threading a needle'

Having managed to negotiate a way through Libyan airspace, the record attempt skirted Iraq before narrowly avoiding restricted airspace over Russia and Iran.

An exhausted Mr Branson said from the tiny capsule on Sunday: "Somebody was looking over us last night.

"We not only missed a storm, but also missed Iraq by 60 miles and Iran by seven miles and Russia by 10 miles."

Project director Mike Kendrick likened the achievement to "threading a needle".