Passengers on the giant Qantas Airways jet forced to make an emergency landing in Singapore on Thursday said they heard a loud bang and saw pieces of one of the engines fall off soon after take-off for Sydney.

The Airbus A380, which had originated in London and was carrying 459 people, suffered failure of one of its four engines.

Australian officials said no one on board was injured. One passenger said an explosion ripped off the engine's rear casing.

"I just heard this massive bang, like a shotgun going off," Tyler Wooster told Australia's Network Nine television.

"Part of the skin had peeled off and you could see the foam underneath, pieces of broken wires sticking out."

Thursday's incident was one of most serious for the A380, the world's biggest passenger jet, in its three years of commercial flight. Qantas said it was grounding its fleet of six A380s pending a full investigation.

"I was sitting over the wing, where the No. 2 engine is. I was looking out of the window on the tarmac as we took off," Ulf Waschbusch, another passenger, told Reuters.

Former aircraft engineer Neil Shephard was also on board.

"Four or five minutes after the flight there was a loud bang. The pilot said there was a technical issue with the plane and then we circled around for an hour to dump the fuel," he told Reuters.

"During the landing, it was a bit wobbly. We could not tell the extent of the problem until we got out of the plane where we could see one hole around six to seven inches wide on the wing. The pilot did a good job, it could have been worse."

The plane circled Singapore to burn fuel before making an emergency landing. It had been in the air almost an hour.

"Qantas flight QF32 was en route from Singapore to Sydney, the number two engine has shut down, so as a precautionary measure we are taking it back to Singapore," a Qantas spokeswoman said.

Qantas said the airliner landed at 11.45am local time.

No passengers or crew have been injured, Australia's Foreign Affairs and Trade department said.

Six fire engines immediately swarmed around the aircraft as soon is it landed on the tarmac, an AFP reporter at Changi Airport said.

"I can see smoke coming out of it," the reporter said.

"One of the engines on the left wing looks blown off. It is black and has jagged edges."

A380 FLIGHTS SUSPENDED

Following Qantas's decision, two A380 flights from Los Angeles would be grounded tonight, as would one in Sydney.

Speaking in Sydney late this afternoon about today's incident, Qanta's chief executive officer, Alan Joyce, said the aircraft and its engine were new.

"We have decided that we will suspend all A380 takeoffs until we are fully comfortable that sufficient information has been obtained about QF32,'' he said.

"We will suspend those A380 services until we are completely confident that Qantas safety requirements have been met."

He said the suspensions were a precaution until Qantas understood the reasons for the incident.

He stressed today's incident was the first "issue" that had occurred "with this engine failure".

"We take our safety standards very seriously," he said.

REPORTS OF EXPLOSIONS

Indonesian authorities said there had been some sort of explosion over the island of Batam, just south of Singapore, at about 9.15am local time.

The explosion rained debris on a downtown area of Batam. Pictures on local television showed the Qantas logo on some of the debris.

Australian Geoff Reay, who lives on Batam Island, said his neighbours all heard an "explosion" and ran out on to the street.

"Our little boy goes to [Elsadai School], about 200 metres from where there are bits of the aircraft on the ground," Mr Reay, a former Qantas flight attendant, said.

The debris fell in the suburb of Dutamas, Mr Reay said.

A Qantas spokeswoman said there was "no suggestion it's come from our aircraft".

The incident sparked widespread rumours through Twitter that the plane had crashed, which Qantas said were wildly inaccurate.

Indonesian media reports said jet debris had fallen on downtown Batam and pictures on local television appeared to show the Qantas logo on some of it.

Tatang Kurnia, head of Indonesia's Transportation Safety Board, said the explosion came from a Qantas plane that had just lifted off from Singapore.

''We've been informed from Singapore that a Qantas plane overflying the area defuelled and then made an emergency landing back in Singapore,'' he told MetroTV.

Kompas, a leading Indonesia newspaper, had reported on its website that it was "suspected that a Qantas plane exploded in the air near Batam".

The website report provided no source for the story.

An eyewitness, Hana, told Indonesia's Metro television that she saw a plane that was on fire overhead before hearing a loud explosion.

Meanwhile, Elfhinta radio quoted a police officer in Batam, Eryana, saying some of the plane had been found.

"We are still collecting debris," he said.

"It looked like a big plane. Like a Boeing 737 - 400. It looks like Qantas because of the red and white colour."

A Qantas pilot, who did not want to be identified, said engines were routinely shut down on aircraft which fly around the world but "it must have been quite a catastrophic failure if it blew parts off an engine".

Earlier Reuters had reported that Qantas had  told CNBC television that a plane had crashed near Singapore and it was an Airbus A380. It later reported that Qantas had  denied crash  reports and said a plane had experienced  engine trouble.

In a recent similar incident, an engine exploded on a Qantas flight to San Francisco on August 30, with debris tearing holes in the engine cover.

Australian Transport Safety Bureau investigators found all of the engine's turbine blades had either fractured or broken away. The cause of the explosion of the Boeing 747's Rolls Royce RB211 engine is still under investigation.

 Qantas shares slumped 15 cents, or 3 per cent, to $2.82 on initial reports of a crash but soon recovered and were recently trading at $2.92.

PREVIOUS QANTAS INCIDENT

In a recent similar incident, an engine exploded on a Qantas flight to San Francisco on August 30, with debris tearing holes in the engine cover.
 
Australian Transport Safety Bureau investigators found all of the engine's turbine blades had either fractured or broken away.
The cause of the explosion of the Boeing 747's Rolls Royce RB211 engine is still under investigation.

PREVIOUS A380 INCIDENTS
 
A Singapore Airlines flight was forced to turn back on a flight from Paris in December last year due to an engine problem.
 
In August, German airline Lufthansa shut down one of the engines on a Airbus A380 flying from Tokyo to Frankfurt.
 
Flight crew detected a change in oil pressure which was probably the result of dirt particles clogging a filter in the hydraulic circulation system, Lufthansa said at the time.
 
Air France has also been forced to ground its superjumbo several times due to a problem with the fuel system.

- TOM ALLARD and MATT O'SULLIVAN - Sydney Morning Herald, with Reuters and AAP