A 300ft yacht owned by Microsoft's billionaire co-founder has allegedly caused extensive damage to a protected area of coral reef in the Cayman Islands.

The anchor chain on Paul Allen's vessel damaged 80 per cent of coral reef in Grand Cayman's West Bay Replenishment zone, according to officials.

A spokesperson for the Caribbean Islands' Department of Environment told Cayman News Service: "In addition to assessing the damage and determining the cause of this incident, we are also paying close attention to lessons learned so that we can more effectively prevent these accidents while still hosting visiting yachts."

Mr Allen has denied responsibility for the damage, saying the yacht's crew had followed the Port Authority's instructions of where to place the boat.

The ship was reportedly diverted by shifting winds towards the reef before it was moved to avoid damage.