They are called the space cowboys, a group of wealthy entrepreneurs promising cut-price journeys to the stars and challenging Nasa’s half-century dominance of the final frontier.

A new name joined an already crowded list yesterday when an unmanned spacecraft funded by Elon Musk, the founder of PayPal, blasted off from a launchpad in the South Pacific and reached an altitude of 320km (200 miles), the orbiting height of the International Space Station.

“I’ll characterise this as a very good day in space,” Mr Musk said. This was despite a premature end to the mission when Falcon 1, a 21.3m (70ft) vehicle developed by his California-based SpaceX company, burnt up on reentry after rolling out of control less than five minutes into its flight from the Kwajalein atoll in the Marshall Islands.

“We successfully reached space and really retired almost all the risk associated with the rocket. All in all, we feel pretty good about this launch,” Mr Musk added.

The test mission followed several recent demonstrations of spaceflight capability by a new generation of privateers and businessmen, including the Virgin tycoon Sir Richard Branson, who has promised to send 50,000 “space tourists” beyond Earth’s atmosphere by the end of the decade.

Virgin Galactic, which he hopes will be flying by 2009, will charge £100,000 for a four-minute ride into space and has already booked its first group of 100 passengers. Its six-seat SpaceShipTwo is the successor to the pioneering craft of the aeronautical engineer Burt Rutan, which was financed by Microsoft’s Paul Allen and which won the $10 million (£5 million) Ansari X Prize for making two journeys into space in five days in 2004.

Another key player is Jeff Bezos, the founder of Amazon. com, who sent his oddly shaped Goddard capsule prototype on a 40-second flight from the Texas desert in November. He plans to turn his Blue Origin venture into a commercial operation for paying customers.

Meanwhile, a private budget space “hotel” called Genesis I is orbiting Earth after its launch from Ukraine last July by Bigelow Aerospace, a Las Vegas company founded by Robert Bigelow, the Budget Suites motel magnate.

For now, its only residents are cockroaches sent up as an experiment, and it will welcome new arrivals — ants and scorpions — when a second module launches next month. But the company has plans to add a module for human guests in 2010 to make it the world’s first privately owned, permanent space station.

Others with rockets in development or testing include John Carmack, author of the Doom and Quake videogames, and Jim Benson, founder of Compu-search, an IT company.

“This is real. We’re not dreaming any more,” Mr Branson told Time magazine this month. “I’m absolutely sure that millions of people want to go into space and it’s up to us to make it affordable to those people.” Instead of viewing the fledgeling space tourism industry as a threat to its superiority, Nasa regards developments in the private sector as an asset. The American space agency is under severe budgetary pressure and faces a five-year lull in manned spaceflight between the retirement of its ageing shuttle fleet in 2010 and the scheduled first manned launch of the new Orion craft in 2015.

The agency has signed technology-sharing agreements with several entrepreneurs, including Mr Musk, who won a $278 million contract to explore the development of a “shuttle” service for cargo to the space station. SpaceX, founded in 2002, also hopes to carry two commercial satellites into space later this year.

“We are now entering a Renaissance period of space exploration,” Michael Griffin, the head of Nasa, told the World Economic Forum in January. “Wealthy individuals will play a role in advancing the work of our architects, engineers and technicians. Nasa’s job is not to sponsor space travel for private citizens; that is for private industry. My hope is the reverse — that when the public can purchase rides into space, Nasa can leverage this capability.”

The lower cost of private launches is something that Congress is likely to consider when it debates Nasa’s future budget, which stands at $16.2 billion this year. The launch of Falcon 1 yesterday cost an estimated $7 million, compared with the $500 million cost to the US taxpayer of each space shuttle mission.

Experts say that it is still too early for the private space industry to have a significant impact on Nasa’s immediate future. “There are lots of things going up and coming down again. The difficulty is getting things into orbit,” said Professor John Logsdon, director of the Space Policy Institute at George Washington University.

Elon Musk

— Born in South Africa, 1971

— Graduated in physics from Pennsylvania University

— Father of triplets, born last year

— Co-founded PayPal, the online payment system, in 1999. Sold it to eBay for $1.5m in 2002

— Ranked 12th on Fortune rich list, has $1m McLaren Formula One sports car and vintage Russian jet fighter

— Is behind development of a sporty electric car that he says has the acceleration of a Porsche 911

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