The Shoreham air disaster pilot was involved in a separate incident one year before the crash that killed 11 people, according to reports.
Families of the victims have been informed the incident during the Southport Airshow on September 20 2014 is being looked at as part of the investigation into the crash last summer.
The jet Andy Hill was flying that day was considered to be too low and too close to the crowd, it has been said.
David Walton, who was the Flight Display Director responsible for the safety at the Southport event, told ITV News a stop call was immediately issued and the display was terminated.
He said: "A 'stop' call was immediately issued by the Flying Display Director (FDD) on the display radio frequency and the flying display was terminated.
"The Flying Control Committee (FCC) had also witnessed the event and agreed with the course of action.
"The pilot was debriefed, initially on the telephone and later in person, and agreed to amend his display for the Sunday display."
Heather Minshull, who was a spectator at the Southport airshow, added that she remembered the Jet Provost T5 being very loud.
She continued: "The jet had come down in a dive which looked ok but then at the bottom of the dive it seemed to loop and face the wrong way and head very low and just above the roof top of that stall. It looked to me as if the plane was about to or could have crashed.
"I remember looking at it and thinking I'm sure that plane nearly hit. I'm sure that that plane nearly crashed.
"I do recall straightaway that the plane flew high and went, so it felt very much like a cancelled manoeuvre as if something had gone wrong, and gone wrong very quickly, and therefore the plane had been pulled out of the display.
"I do recall thinking that plane would have come down on the beach. It would have come down right in front of me. There was definitely a crowd there."
The Civil Aviation Authority - which had an inspector at the event - said it had spoken to Mr Hill about the incident.
Sussex Police is investigating the Shoreham air crash which took place on August 22 last year.
It confirmed it was aware of the 2014 incident, with Detective Chief Inspector Paul Rymarz adding: "This incident forms a line of inquiry in our wider investigation. All the families are aware of our interest in this incident."
The Air Accident Investigation Bureau has published an interim report into the Shoreham crash and a full inquest is expected to take place in June.