Coastguards with paramedics and helicopter support were put on standby to rescue the Virgin tycoon as low pressure forced him to abandon his expedition in shark-infested waters near Hawaii.
The descent, after a series of crises, came short of the 10,406-mile record set by his co-pilot, Steve Fossett, last year.
Mr Branson announced his decision at 1pm yesterday. "I am sorry to have let people down," he told staff at his London headquarters. The low- pressure weather which had stalled his journey was "like a solid brick wall", he said.
Putting a brave face on his third unsuccessful attempt to break the last great aviation record, Mr Branson added: "Until today, the voyage had been a fascinating journey."
An equally deflated project director, Mike Kendrick, said: "So near and yet so far ... The weather has beaten us. We have failed."
The three-strong team, consisting of Mr Branson, Mr Fossett and Per Lindstrand, had been hoping to celebrate with a Christmas stew as they flew over the United States. Instead they spent the day trying to ditch the 279ft high balloon in the sea off the island of Oahu, near Hawaii. It was the experimental craft's first landing.
The balloon had already gone more than halfway around the world since taking off in Morocco on 18 December. Crossing the world's biggest ocean was always going to be the most dangerous part of the journey. Earlier problems were political.
On Tuesday, the balloon drifted off an agreed course over China. Peking ordered the balloon to land but after the intervention of Tony Blair and others the Chinese relented.
The balloon then managed to avoid North Korea, which had refused permission to enter its airspace. Mr Branson was forced to alter his original flight path to avoid US and British bombing strikes on Iraq, and then had to negotiate a narrow corridor between Russia and Iran, both of which refused use of their airspace.
But it was the weather which got the better of them. They feared they would have to spend at least a week trying to navigate their way out of the low pressure system. "We'd go around in circles for a week and still not be able to do anything about it," Mr Kendrick said.
Mr Kendrick said they had missed by about an hour the high westerly winds that would have whisked them the rest of the way across the Pacific.