Half a dozen schoolchildren aged 11 to 15 were on board the coach on route to Crispin School in Somerset when an electrical fault sparked a fire in the dashboard.
The driver quickly stopped the Avalon Coaches bus on the A39 in Ashcott, and safely ushered the children off - just minutes before the vehicle was engulfed in flames.
The coach's windows were blown out and the front of the vehicle was completely destroyed by the blaze.
Devon & Somerset Fire & Rescue sent fire crews to extinguish the fire at 8.20am on Monday October 13.
Retired Frank Smith, 68, photographed the incident outside his home.
"There was a massive bang and the cab went right up," he told the Western Daily Press. "As I stood there watching it there were more and more bangs as all the windows began to shatter.
"I was really panicky because when I got down there you couldn't tell if anybody was still on board or not.
"It wasn't until someone told me the children were all at the local shop that I was sure it was empty.
"The fire and police seemed to take forever to arrive, the coach was already half gutted by the time they got there but when they did it was all hands to the deck.
"We were really worried about it exploding but they covered it in foam to make sure it didn't."
The children were all unharmed and were taken to school by a replacement bus.
The driver was sent home to recover from the shock of the incident.
The incident could have been far more serious as the coach was due to pick up around 30 more children just five minutes later.
Paul James, headteacher of Crispin School, praised the manner in which his students handled the situation.
"They did everything right and assembled where their friends were," he said. "Some called the emergency services and some called parents and neighbours. to let them know and they kept everyone away while the bus driver was trying to sort out the situation."
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