Defenders of this hypothesis say Mars' reddish dust came from iron in rocks that over billions of years dissolved into the planet's oceans, lakes and rivers.
The iron oxidised and was then deposited all over the Martian surface thanks to the planet's weather system. It was then left high and dry after the waters mysteriously disappeared, either receding below ground or boiling into space.
But US scientist Albert Yen of NASA's Jet Propulsion Laboratory has assailed this idea, noting a strange discrepancy between Mars' dusty topsoil and its rocks.
The topsoil has more magnesium and iron than the rocks, according to data sent back by the 1997 Mars Pathfinder mission.
Yen believes that the dust can only have come from tiny metal-rich debris that constantly falls onto Mars from space.
According to his calculations, the dustfall is big enough to coat Mars to a depth of five centimetres (two inches) every billion years.
Yen has tested his theory by exposing metallic iron to laboratory-created conditions that mimick Mars' sunlight, atmospheric gas and chilly temperature, New Scientist reports in next Saturday's issue.
He found that red iron oxides began to form within a week -- and no water was necessary.
Yen agrees that surface water was probably abundant on Mars, but says it was clearly far less important in weathering the planet's surface than is conventionally thought.
Three missions -- one from Europe, two from the United States -- are en route for Mars with the goal of testing its soil for the presence of water and other essentials for life.
The first probe, the European Space Agency's Mars Express/Beagle 2 mission, is due to arrive on December 25.
Yen told the British science weekly that it was likely the probes would find nickel in the soil that would back his theory that Mars was coloured red thanks to space dust. Nickel is abundant in meteors but is rare in Martian rock.