All communication with the craft was lost late on Saturday, 11 months after its launch last September and barely 68 hours before it was due to make the crucial entry into orbit. Scientists have had high expectations of Observer and of the information it might send home.
Officials remained hopeful that the probe, the size of a golf- cart but crammed with scientific measuring instruments, would still manoeuvre into a polar orbit over the planet today as programmed. But unless contact can be regained, no data will be transmitted to Earth and the mission will have been useless.
Under pressure from Congress and dogged by technical difficulties on its shuttle programme, Nasa - the National Aeronautics and Space Administration - had been counting on Observer to help restore some of its lost prestige.
Engineers at Nasa's Jet Propulsion Laboratory in Pasadena were reported to be 'tense but not gloomy' as they continued their efforts to elicit some sign of life from the craft. Tactics have included firing long series of commands at its computers in the hope of some kind of response.
After its roundabout journey from Earth of 450 million miles, at a speed of 10,200mph, the craft is programmed to station itself 240 miles above the planet's surface before activating all its measuring instruments later this year. The last time scientists got a glimpse of the surface of Mars was during the twin Viking missions to the planet in the Seventies.
A wealth of information was expected from Observer, particularly on the planet's geological make-up. Scientists are keen to understand why Mars, believed to be biologically dead, is so different from Earth - roughly the same size and distance from the sun.