Michael Rennie, from Perth, managed to jump to safety only to look on as his wife Yvonne was killed along with 18 other tourists.
The 49-year-old ran to nearby houses to raise the alarm, but it was too late.
Mr Rennie suffered severe burns to his face and was taken to hospital along with the Egyptian pilot of the balloon. He is said to be in a stable condition.
Details of his ordeal were revealed by a reporter on the scene in Luxor who tweeted: "Locals tell me balloon crash survivor Michael Rennie ran to these homes shouting for help. He had burns to the side of his face. Witnesses say Mr Rennie had run 200 yards along a track from where the balloon first touched down.
"He had seen the balloon rise up above him, with the basket and canopy ablaze – his wife Yvonne still in it. He shouted, 'my wife'."
It is understood the balloon was coming in to land after a dawn sight-seeing trip to the Valley of the Kings.
When it was only 10ft from the ground, a landing cable is believed to have snagged on a gas canister and a fire broke out on board. This caused a blast which filled the canopy with hot air and sent the vessel soaring skywards again.
Mr Rennie and the pilot jumped out before the basket rose further into the sky, it was reported.
As many as nine people are believed to have jumped to their deaths from the basket, while the others died when it crashed to the ground after an explosion.
Joe Bampton, 40, from London and his Hungarian-born partner Suzanna Gyetvai, 34, also died in the accident.
Mrs Rennie had worked as an appointments officer at Perth Royal Infirmary since June 2006.
A spokesman for the hospital said she was a highly valued member of the radiology department.
Department manager Douglas Mitchell said: "We are in shock at the sudden and tragic loss of Yvonne.
"She was a much-loved colleague who enjoyed her job and her tragic passing has had a huge impact on all of us who knew and worked with her. She will be sadly missed."
NHS Tayside's clinical services manager, Tejinder Chima, added: "Yvonne's untimely death has left all the staff at Perth Royal Infirmary and throughout NHS Tayside deeply saddened at the loss of a very dear colleague and friend."
Mr Rennie is a manager with construction firm Carillion and a spokesman for the company said its staff were shocked to hear what had happened to the couple. He added: "Our thoughts are with the family at this very sad time."
An investigation has been launched into the disaster and all hot-air balloon flights in Egypt have been cancelled until the cause of the incident is discovered.
This is the second crash involving the company Sky Cruises in just 18 months.
One of its balloons crashed into the Nile in October 2011. It hit a boat and was left floating on the river with passengers on board. No-one was killed but some tourists suffered minor injuries.
It is understood the pilot involved in that crash no longer works for Sky Cruises – the firm used by Blue Sky travel agents who represent Thomas Cook in Egypt.
Blue Sky manager Kamal El Kordy said: "All of the excursion companies we use satisfy the health and safety demands of the major British travel companies. We work according to the laws in their countries."
In April 2009, 16 people were hurt when a balloon crashed during a tour of Luxor. The balloon was believed to have hit a mobile phone transmission tower near the banks of the Nile.
After that crash, early-morning hot-air balloon flights over the Valley of the Kings were suspended for six months while industry safety measures were tightened up.
There were at least four other non-fatal crashes that year involving tourists and there were also incidents in 2007 and 2008.
Meanwhile, tour operator Thomas Cook defended its Egypt balloon trip arrangements today amid safety concerns following this week's Luxor disaster which claimed 19 lives.
Thomas Cook had been continuing to use Sky Cruises, the company involved in Tuesday's crash and which was also involved in a balloon crash into the Nile in October 2011.
Tuesday's flight, in which three Britons were killed, was booked with Sky Cruises by a ground agent, Bright Sky Travel, which Thomas Cook contracts to provide various excursions in Egypt.
Today it was revealed that other balloon owners operating in the area were claiming that Bright Sky Travel had a reputation for maximising its margins and starving them of cash.
The Times reported that after the Nile accident in October 2011, in which everyone survived, a video was produced saying: "So be warned if you take a wonderful balloon flight in Luxor."
Today, Thomas Cook said it insisted that local companies offering balloon trips were fully licensed by Egypt's aviation authority.
The company added that Sky Cruises had been "verified and approved by the Egyptian Civil Aviation Authority".
Ala Mahmoud, head of Egyptian balloon company Magic Horizon, accused Thomas Cook of "not being professional" in its dealings with Bright Sky.
He told the Independent newspaper that when Thomas Cook hired Bright Sky as its agent three years ago, his company had been invited to bid for a contract to provide balloon flights over Luxor.
He refused after being offered the equivalent of £35 for every £70 ticket.
Mr Mahmoud said: "The problem is they are taking so much money. It means the balloon company may not be looking for safety or quality, they are just looking for quantity."
Amr Abd el Nabi, a pilot for balloon firm Hod Hod, agreed. He told the paper: "This situation makes me very angry."
Thomas Cook said today that Tuesday's balloon ride had not been booked as part of a package holiday but had been booked with Sky Cruises by Bright Sky Travel.
A Thomas Cook spokesman went on: "We can assure our customers that we insist that the local companies which offer hot air balloon excursions to our guests in Luxor are fully licensed by the Egyptian Civil Aviation Authority (CAA). In this tragic case, the operator was Sky Cruises, which had been verified and approved by the Egyptian CAA.
"We, like all other major tour operators, rely upon this endorsement by the Egyptian CAA and it is reasonable for us to do so as we rely on their expertise."