SummaryA new higher‐order accurate method is proposed that combines the advantages of the classical p‐version of the FEM on body‐fitted meshes with embedded domain methods. A background mesh composed by higher‐order Lagrange elements is used. Boundaries and interfaces are described implicitly by the level set method and are within elements. In the elements cut by the boundaries or interfaces, an automatic decomposition into higher‐order accurate sub‐elements is realized. Therefore, the zero level sets are detected and meshed in a first step, which is called reconstruction. Then, based on the topological situation in the cut element, higher‐order sub‐elements are mapped to the two sides of the boundary or interface. The quality of the reconstruction and the mapping largely determines the properties of the resulting, automatically generated conforming mesh. It is found that optimal convergence rates are possible although the resulting sub‐elements are not always well‐shaped. Copyright © 2016 John Wiley & Sons, Ltd.