A nine-year-old boy suffered a suspected cardiac arrest after the car he was in collided with another vehicle in Morecambe.
The child also suffered a broken arm in the incident on Sunday evening, and is now in a stable condition in the Royal Lancaster Infirmary.
A five-year-old girl was also treated for shoulder injuries and shock.
The children, who are from Kendal, were in a Ford Mondeo when the collision with a Renault Clio took place just before 7.30pm on Sunday near Coastal Medical Centre in Heysham Road.
The Clio had earlier been involved in a minor collision with a Range Rover in a car park in Marine Road Central.
Both cars had then driven off towards Heysham when the Clio collided with the Mondeo.
An 18-year-old man from Heysham driving the Clio was treated for concussion and serious stomach injuries at Royal Preston Hospital.
A 25-year-old man from Lancaster, who was driving the Range Rover, was arrested on suspicion of dangerous driving and bailed until March 17.
The road was closed for six hours following the incident.
Police are now appealing for witnesses to come forward. They can call 101 quoting reference 1188 of 29th January.
Sgt Claire Pearson of Lancashire Police said: “We are continuing to investigate the circumstances of a serious road traffic collision in Morecambe.
“Three people have been injured – two seriously – and we want to establish the exact nature of the incident.
“We are appealing to anyone who witnessed the collision and has not yet spoken to police to contact us.
“We are particularly keen to trace two men who helped at the scene. Four men opened the door to the Clio in order to help the driver out of the car. We have traced two of those males, but have not yet identified the other two men.
“If you helped at the scene, please get in touch.”