Michael Edwards, secretary of the Lancashire Aero Club, which was sponsoring the air show, said the De Havilland Mosquito, owned by British Aerospace, was the last flying example of its type.
The operations manager of Greater Manchester Ambulance, Clive Heather, who was at Barton Aerodrome to provide on-site medical assistance, said: "The plane was going through an obviously well-rehearsed routine. Then it climbed higher and higher towards the edge of the airfield before it spiralled."
Mr Heather said it became clear that the aircraft was not going to complete the manoeuvre. The noise of the crashwas heard around the airshow.
Two paramedic units and an emergency fire service unit were first at the scene of the crash, which occurred in dense woodland running parallel to the M62. Debris was strewn across a field and nearby woodland. Paramedic crews fought through the fire to reach the cockpit. They found the two bodies and had them flown by RAF helicopter to Hope Hospital in Manchester.
Michael Edwards, Lancashire Aero Club chairman, said the tragedy had cast a shadow over what had been a happy, family event. John Hadfield, flight safety officer at British Aerospace, who owned the plane said that both crew were dedicated and highly experienced aviators.
The pilot, a professional, with many years of flying experience, had flown the place many times and the second man was believed to be an engineer in charge of looking after it on the ground.
Mr Hadfield said the crash had destroyed an important piece of aviation history.
"It is the loss of a unique aircraft," he said. The wooden De Havilland Mosquito was well-known for its speed and had provided an invaluable service during the Second World War on photo-reconnaissance missions and as a leader plane for squadrons of Lancashire and Halifax bombers.
The wreckage will be recovered and examined by CAA investigators in an attempt to discover what could have caused its final fatal descent.
The identities of the pilot and navigator are being witheld until relatives are informed.