Diane Hill, from Acomb, York, was thought to have had the cooker on as she transferred the fuel, which ignited and set fire to her clothing.
Next-door neighbour Margot Johnston, 86, said: “I had been gardening and came in to make myself a cup of tea and I was aware of a cloud of smoke coming over the hedge. I thought because it was a lovely day that they must be having a barbecue. Then I noticed there was someone in the garden who seemed to be on fire.
“One of the daughters was in the garden and I said ‘Have you phoned for the ambulance?’ and she said she had. Even all through the war I had never seen anything like it.”
Ms Johnston added that both of her neighbour’s daughters, Lauren and Grace, were in the garden at the time of the incident.
She said: “Diane had obviously got home and started to cook dinner while decanting petrol. Diane was conscious the whole time. They put her in the ambulance and took her away.”
Prime Minister David Cameron offered his thoughts to the woman and her family.
He said: “This was absolutely a desperate incident and a terrible thing that has happened to this woman. My heart goes out to her and her family. Everything that can be done is being done to help her at this time.”