insulation covering fuel tank, not the fuel tank itself

CAPE CANAVERAL, Fla, July 4 (Reuters) NASA prepared for a third attempt to launch space shuttle Discovery today on a mission vital to the program's future after easing concerns over a small crack in foam insulation on the ship's fuel tank.

Bad weather canceled planned launches on Saturday and Sunday, but NASA forecasters said there was an 80 percent chance of favorable weather on this US Independence Day, the best prediction so far in this launch window.

Space agency workers began loading super-cold fuel -- liquid hydrogen and liquid oxygen -- into Discovery's massive external tank before dawn.

The flight, set to lift off at 2:38pm (local time) from the Kennedy Space Center in Florida, is critical to NASA's plan to finish the half-built International Space Station before the fleet is retired in 2010.

Another accident or serious problem likely would ground the shuttles permanently.

''I think the teams have done a very good job of avoiding ...

launch fever,'' NASA's associate administrator for spaceflight Bill Gerstenmaier told reporters after managers decided the small foam crack was not a launch hazard.

NASA is painfully aware of the potential consequences of foam falling off the shuttle's fuel tank.

Shuttle Columbia and seven astronauts were lost in 2003 after debris striking the orbiter on launch caused damage that made it to disintegrate on its return to Earth. Large chunks of foam also fell off the tank during the first post-Columbia mission last year.

Discovery's launch will be only the second since the accident.

Despite two major redesigns, more work on the tanks is pending.

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