The Army is investigating the incident in which a Red Devils parachutist had to be saved in mid-air by a team-mate.
A fast-thinking soldier, who was part of the British Army's freefall parachute display squad, swooped over to catch his struggling team-mate whose parachute had not opened properly. He brought him in to land safety in the water at Queens Dock on the Cumbrian coast.
Thousands of anxious onlookers saw the stricken parachutist "violently kicking" and tangled up in his parachute during the Whitehaven Air Show last night.
An Army spokesman said it was the first time a parachute has failed in 25 years.
The spokesman said: "We can confirm that there was an incident during the Whitehaven Air Show, when a member of the Red Devils display team's parachute failed to open correctly.
"A team mate assisted in his safe landing, both men were unharmed, and we are now investigating to find out the cause of the incident."
Onlooker Lucy Milne told BBC Breakfast: "He was violently kicking his legs and he was trying to get free or trying to manoeuvre. Above him was another man tangled up in his parachute. His parachute was collapsed. They started picking up speed and he was wiggling his legs even more."
They then landed in the water.
Everyone clapped when they both popped up in the water and there was a "big sigh of relief that they were both safe". A rescue boat picked them up and one of them gave a wave to show he was safe, according to Ms Milne.
She told BBC Breakfast: "He was so frantically kicking his legs that there was something seriously wrong. It was amazing how he managed to get in to the water and not hurt himself or the man above him."
Volunteer Dianne Richardson said it seemed the chutes did originally open, but that it was as they were manoeuvring in to the stack position that something happened.
She said: "To be honest everybody thought they had been tangled up, but it was only afterwards that they found out that one of the guys managed to manoeuvre to safety.
"There are a lot of masts in the harbour. The professionalism and skills just shows why they are the best in the world.
"There was an audible sigh of relief on the harbour when they (the organisers) put the announcement out that they were safe."
People at the air show, which also included the Red Arrows, praised the actions of the men on the Facebook page.
Sarah David wrote: "Glad to hear both are OK, was awful watching them struggling, especially when they veered off course - until we realised they were purposely targeting the biggest area of water for ditching in to."
Melanie Ryden added: "We felt sick watching them tangled together and falling so fast. So relieved they landed in the water and were unhurt. Well done guys."
The Red Devils formed in 1963 and carry out more than 60 displays every year, according to its website.
It currently comprises 12 serving soldiers from the three battalions of the Parachute Regiment, all of whom have to have at least three years experience.
A message was later posted on the show's Facebook page, saying: "We can confirm that the Red Devil parachutists are both safe and sound. For the first time in 25 years they had a parachute fail.
"One team member caught his team-mate and brought him into Queens Dock. Our safety procedures worked perfectly and a huge thank you to Whitehaven Marina for getting them out of the water so quickly."