The politician was pulled semi-conscious from the wreckage, his face swollen and blood running across his cheek, after the accident at Hinton-in-the-Hedges airfield, near Brackley, Northants.
Police said that the pilot and Mr Farage, who is contesting Speaker John Bercow’s seat in Buckingham, were “extremely lucky” to have walked away from the crash with only minor injuries.
The aircraft was pulling a Ukip banner which got wrapped up in the tail fin of the aircraft when it took off just after 8am. The banner carried the slogan “Vote for your country - Vote Ukip”.
The pilot, Justin Adams, sent out a desperate May Day signal before the aircraft flipped and nosedived into the field.
Mr Farage, 46, was found suspended upside down in his cockpit seat, bent-double under the plane. He was pulled from the tangled wreckage dressed in a pin-stripe suit, blue shirt and tie, with a Ukip rosette still attached.
Remarkably, he suffered only rib, chest and facial injuries and was taken to a local hospital before being transferred to the John Radcliffe in Oxford, where he will be detained as a precaution until the weekend.
Mr Adams, a former Radley schoolboy with 25 years pilot experience, was more seriously hurt. He was taken to Walsgrave Hospital in Coventry having suffered leg and back injuries. His condition was not said to be life-threatening.
Eyewitnesses told how the plane banked and suddenly plummeted seconds after take-off.
Duncan Barkes, a UKIP spokesman who witnessed the crash said: “It was one of those things that happened in slow motion.
“One minute the plane was in the air it was flying with the banner over the airfield.
“I don’t know what happened because it happened so quickly but the plane flipped. I don’t know if it was cross winds or whether the plane got caught up in the banner.”
Another shocked witness said he thought both men had died in the crash when he saw the plane.
He said: “He was coming around to do another run and then it fell out of the sky, and flipped over on its front.
“It was all over in a couple of seconds. I really thought they had both died.”
Chris Adams, Ukip parliamentary candidate for Aylesbury, said: “Nigel was unconscious but he can talk. He’s been coming in and out of consciousness and has been X-rayed.
“I’m absolutely shocked and stunned to see how anyone got out of that alive. I’m still trembling now.”
A Ukip spokesman added: “We are sure that everybody involved in the General Election will join us in hoping and praying that the pilot recovers from his injuries as soon as possible.”
Mr Adams, who is in his early forties, got an acrobatic stunt licence at 16, before he could drive a car, and has been flying for the past 25 years.
Mr Farage, a colourful Ukip MEP and the party’s chief spokesman, gave up the presidency of the organisation to run against Mr Bercow who, as Speaker, by tradition, is not opposed by the main parties.
Mr Farage had not had the opportunity to cast his vote before the accident and a spokesman said it was unlikely he would be discharged from hospital in time for the election results.
The Air Accidents Investigation Branch (AAIB) has launched an inquiry into the crash, which happened just after 8am.
The aircraft was a PZL-104 Wilga 35A, a Polish fixed-wing landplane, often used for crop spraying.
It is “a perfectly serviceable, very robust, utilitarian aeroplane”, said Kieran Daly, an independent aviation consultant.
However it also emerged that the same aircraft was involved in another incident four years ago when it was towing a banner.
An official report said the 1995 registered plane was landing when there was a sudden “thump” and the plane “staggered” in the air after the banner had been dropped uneventfully.
Inspectors found that the pilot tube had inexplicably come loose and the right front wing spar had broken. The plane, which landed safely, had a certificate of airworthiness valid until July 1 this year.
The plane had left the Winchester area early yesterday and flew into Hinton. The accident happened as it was taking off again from Hinton to fly over Buckinghamshire and Oxfordshire.
An AAIB spokesman confirmed an investigation was under way and refused to speculate on the cause of the crash.
He said: “The AAIB are investigating and that’s all there is to say so soon after an accident.
“We need to determine the circumstances of the crash and it is too soon to start speculating on the cause of the incident.”