US President Donald Trump has slammed tech billionaire Elon Musk's plan to form a new party as "ridiculous." He says starting a third party just "adds to confusion."

Trump made the remarks on Sunday when asked by reporters about Musk's social media post the previous day, in which he wrote, "Today, the America Party is formed."

The president said: "We have a tremendous success with the Republican Party. The Democrats have lost their way." Referring to possible confusion, he added that "Third parties have never worked."

Musk floated the idea of a third party after Trump signed into law a sweeping tax-cut bill. He has consistently opposed the legislation, saying it would significantly increase US fiscal deficits.

The entrepreneur said 65 percent of respondents were in favor of his plan in a poll he conducted online on whether a third party should be formed.

Musk headed the Department of Government Efficiency until late May in Trump's second administration and worked to slash government spending. But he has been at odds with the president following their split.

Musk has not disclosed specifics about the new party. But the rift between the two may deepen further as the third-party plan appears aimed at keeping Trump and the Republicans in check ahead of next year's US midterm elections.