The driver of the Citroen, a woman in her 80s from Croston, suffered serious injuries to her pelvis and ribs as well as internal injuries.
She was taken to Royal Preston Hospital for treatment, police said.
The driver of the Vauxhall, a woman in her 30s from Tarleton, suffered bruising.
Detectives said they were keen to trace a local post office worker who was believed to have witnessed the collision but left before police arrived.
Sgt Steve Hardman, of Lancashire Police's serious collision investigation unit, said: "I would encourage anyone who saw what happened to please make contact with us as soon as possible.
"We believe a post office worker witnessed the collision - if that was you, please get in touch."
Anyone with information can contact police by calling 101 or emailing [email protected], quoting log number 0577 of January 7.
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