Fifty-four people were killed here this morning when an engine on a Boeing 737 jet burst into flames during takeoff, spraying jet fuel across the wing and fuselage and engulfing the plane in fire in less than a minute.

The British Airtours charter, carrying 137 British vacationers and crew bound for the Greek island of Corfu, was accelerating at more than 100 mph along the airport's main runway when the port engine of the two-engine plane exploded, apparently cutting a fuel line.

The pilot braked the plane to a stop, and the airport fire brigade was spraying the blaze with foam and pulling passengers from the exits when a second explosion rocked the rear of the aircraft minutes later. Two firemen were blown out of the plane by the second explosion, which appeared to crack the craft behind the wings.

The intense heat caused by this second blast, which seemed to have melted much of the rear portion of the plane, was blamed for the deaths.

"The people who got the worst of it were in the rear of the plane," said one survivor, David Ashworth, 39. "They were trapped."

Survivors -- who jumped out of the forward doors onto emergency chutes or, in some cases, jumped through an emergency exit onto the starboard wing and to the ground -- spoke of thick, suffocating smoke and flames separating them from the back of the aircraft. They described a scene of panic, with passengers screaming and shoving as they fought their way forward from the advancing fire.

Four of the six crew members, including the pilot and copilot, survived; two stewardesses in the back of the plane were killed. Seventy-seven of the 83 survivors were taken to a nearby hospital, and all but 15 had been released by nightfall.

Two, including one child, were said to be in serious condition. All aboard were believed to be British citizens who had booked package tours to Corfu through four separate tour agencies.

In service for 18 years, the 737 is considered to have a good safety record. Of the two fatal crashes involving the plane, one occurred in 1981 when a 737 broke up at 25,000 feet over Taiwan, killing 110 passengers and all crew members. The other was the Air Florida plane that crashed into Washington's 14th Street Bridge during a snowstorm in Jan. 13, 1982, killing 78.

The 737's engine is made by Pratt-Whitney. A spokesman for British Airways, the state-owned parent company of British Airtours, said that the explosion resulted from an "uncontained failure of the turbine in the port engine." The turbine is the large rotating fan inside the engine near the combustion chamber.

Aviation sources in Washington said late yesterday that the trouble appeared not to be in the turbine or compressor sections of the engine but in the combustion chambers.

Prime Minister Margaret Thatcher, who was returning home from a two-week vacation in Austria this morning, had her flight diverted here. She said that "it looks as though something from the engine pierced the fuel cord" and the intense heat from the engine caused the spraying fuel to explode. After inspecting the accident site, Thatcher visited the injured at the hospital.

An airport spokesman said that the second blast might have come from the explosion of two oxygen cylinders in the rear, caused by the intense heat of the burning fuel.

Aviation accident investigators from the Department of Transport began sifting through the wreckage this afternoon for clues to what had caused the engine explosion. Aviation sources initially ruled out sabotage and said that the explosion and apparent fuel-line rupture could have been caused by "runway debris" or even a bird sucked into the engine. There were some indications that part of the turbine fan might have broken off.

The rapid spread of the fire, sources said, could have been due in part to flammable material in the seat cushions. New British aviation regulations call for a flame-retardant seal to be wrapped around the polyurethane seat cushions underneath the upholstery, but deadlines for the change are staggered and had not yet affected the 737.

Some news reports here suggested that the crowding of the plane, filled also with fuel for the Corfu flight that is at the limit of the 737's range, might have hindered passengers' escape.

The seat configuration of the 737 normally allows for 114 passengers, although many charter carriers legally reduce the leg room and add 11 seats. Aviation authorities denied today that the reduced room affected passenger exit and said that all such configurations are allowable only if the plane can be vacated in an emergency within 90 seconds.

This afternoon, the plane lay in a large pool of foam, turned halfway off the runway onto the grass where pilot Peter Terrington had brought it to a stop. Although the front of the craft was intact, the top of the fuselage was jaggedly split open lengthwise just in front of the wings, as if by an old-fashioned can opener.

The area of charred metal extended back and along the sides of the rear third of the plane, which was melted down to the shell. Most of the tail portion appeared intact.

The explosion occurred at 7:07 a.m. (2:07 a.m., EDT). As the aircraft accelerated down the runway, the pilot radioed to the control tower that he was having trouble with the port, or left, engine. Seconds later, it exploded, and he shut down the power and braked the plane, turning it partially off the runway.

"We seemed to be just getting up to takeoff speed when there was a loud bang," said Michael Loftus from the Manchester suburb of Stockport. "It was as if we had hit something on the runway or a tire had blown out. The pilot braked immediately . . . . I looked to the port side and could see flames coming from the wing. People just started panicking straight away."

Airport firemen, who must by regulation be able to reach anyplace at the facility in two minutes, rushed to the scene. Two had entered the plane to pull out passengers when the second explosion occurred.

Loftus' wife, Hillary, said, "I was in a seat two rows away from the door. There was no escape chute. I couldn't see anything; there was foam everywhere." With her 2-year-old son in her arms, she said, "I just dropped out of the door and sat on the wing."

Loftus, meanwhile, had taken their 4-year-old daughter out by the same route. "We had just fallen from the wing," he said. "Then I went back to the plane where I had left my wife. She was still sitting on the wing with the boy, and I told them to jump."

The airport was closed immediately after the accident until 8 p.m., stranding thousands of travelers. Many flights were diverted for takeoff from Manchester, which is 165 miles northwest of London, to Liverpool and Birmingham. Incoming flights were diverted to London's Heathrow Airport and to Prestwick, in Scotland.

Manchester's Ringway Airport, Britain's largest after Heathrow and Gatwick, is primarily a domestic terminal and serves international vacationers to and from the northwest part of the country.

This evening, with a sling around the tail section, a large crane hoisted the plane so it could be wheeled to an apron. Transport Department spokesmen said that parts of the 4-year-old plane, which British Airways bought new from Boeing, would be taken to the accident investigation center at Farnsborough, near London, where the engine would be reassembled in an attempt to find the cause of the explosion. There was no record of problems with the plane.