Becky Kelly was with her friend Rachel Mawdsley, both from Poulton, in the popular tourist destination when the 6.7 magnitude quake struck just off the coast, between the Greek island and Turkey.
More than 120 people have been injured and buildings destroyed by the earthquake, which hit at around 1.30am.
The pair had been enjoying a night out in the Bar Street area of Kos, one of the worst hit areas.
Becky said: "We were about to leave to head back to our hotel when the ground started shaking beneath us - it almost felt like a stampede was coming.
"After a few seconds the buildings, lamp posts, furniture all starting collapsing with one building completely crumbled, crushing loads of people that were stood outside that bar.
"After the initial earthquake there was great panic of a Tsunami, hundreds of people screaming and running away from the beach.
"At this point I lost my friend Rachel as she got trampled by the crowds. We found each other shortly after and were advised to find a high place if possible.
"After an hour we headed to the main square where hundreds of people were injured and crying. Many had packed their suitcases ready to get off the island as soon as they can.
"We slept on the streets as the tremors were strong and often. Today walking around Kos town we could see the full extent of the damage."
Becky's dad, John Kelly, of Scorton, told of his relief to learn the pair were safe after speaking to them this morning.
He said: "They only went last week to work. She said they thought they were going to die.
"There was panic everywhere and a guy covered in blood. Luckily they weren't hurt."
Becky and Rachel are due to fly back to the UK on Tuesday.
Tourists had to flee their hotel rooms when the quake hit at around 1.30am, and have been experiencing aftershocks throughout the night.
Graham Atikinson, from Blackpool, wrote on Twitter that it was 'very very scary' on Kos island.
He said the 'bedroom walls were shaking up to 30 cms', adding it was the 'most terrifying thing ever felt in my life'.
