The 82-year-old, who reportedly suffers from dementia, was sat inside her black BMW in Station Road, opposite the Hand and Dagger pub, when her car suddenly caught fire on Friday (February 12).
A man in a grey works van who drove past and spotted thick black smoke coming from her rear tyre quickly parked up in the nearby pub car park to help.
Moments later, as he approached the car, the tyre burst into flames. The man rushed over to alert the driver, an elderly woman, who he found sat inside unaware that her car was on fire.
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The man pulled the woman and her Golden Retriever to safety as the flames crept from the tyre to the rest of the car.
A local man and his sister who witnessed the drama unfold say they want to recognise the man's quick-thinking which led to a potentially life-saving rescue.
Dalziel Eccleston and his sister Lauren, from Kirkham, had been driving past when they saw the car enveloped in a thick cloud of black smoke.
They pulled over as the woman was being pulled to safety and called 999. Just minutes later, the BMW was engulfed in flames.
"We were not really sure what had happened when we drove past, but we pulled over and called 999," said Dalziel.
"You could barely see the BMW for the smoke, but a man called Paul had pulled the elderly lady and her dog to safety.
"He said the poor woman hadn't realised it was on fire. If that man hadn't stopped and got her out of the burning car, it could have ended tragically.
"As we waited for the fire engines to turn up, the flames spread from just the back tyre to under the car. It then made a few explosions which I believe was the tyres exploding.
"The elderly lady looked shaken and confused and said she hadn’t even noticed her car was on fire at the time.
"Me and my sister made sure this lady was OK and asked if there was anything we could do to help.
"Her daughter arrived and said her mum had dementia. We think she might have become confused and parked up, not knowing where she was.
"It's terrible to think what could of happened," said Dalziel.
"The woman's daughter said she would like to say a massive thank you to the man, who we only know as Paul, who rescued her mum and her dog.
"Hopefully we can find him as I know the lady and her family want to personally thank him."
He added: "The firefighters also did an amazing job in handling the fire and keeping everyone safe."
Fire crews from Penwortham and Fulwood rushed to the scene where they tackled the blaze for 30 minutes.
Today (February 16), Lancashire Fire and Rescue Service said the cause is under joint investigation with Lancashire Police, but did not say whether the fire was being treated as suspicious.
A fire service spokesman said: "The vehicle was well alight on the roadway when firefighters arrived. We sent crews from Penwortham and Fulwood.
"Crews used two hose reels and breathing apparatus to extinguish the fire. The stop message came through around 4pm, so they were in attendance around forty minutes.
"There were no casualties reported and the cause of the fire is under a joint investigation alongside colleagues from Lancashire Police."
Lancashire Police have been approached for comment.