A skydiving instructor has died and his passenger has suffered life-threatening injuries after they crash-landed in a coastal Victorian town this afternoon.

Police said the pair were doing a tandem jump when they "got into difficulty" and came crashing down to land in a paddock on Fischer Street in Torquay about 12.30pm.

Co-owner and Chief Instructor of Australian Skydive Ralph Hamilton-Presgrave told 9News both of the pair's parachutes failed to open, causing them to plunge to the ground.

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Mr Presgrave said the instructor copped the brunt of the fall in an attempt to protect his passenger.

"They did their freefall, they opened their parachute, the main parachute hasn't opened correctly," he said.

"They've elected to use their second parachute and ran into difficulties.

"The instructor has taken the brunt of the fall of the landing and put himself in jeopardy to try and minimise the passenger's injuries."

Mr Presgrave said the instructor was "very experienced" and "definitely capable of doing everything he had to do".

"The actual parachute malfunctioned and that's why we always carry two. In this instant, both parachutes haven't opened correctly.

"I don't know how and I don't know why. It will be investigated fully."

Sergeant Peter Christo from Torquay Police said paramedics worked on the instructor, aged in his mid-30s, for about 20 minutes before he took a "downward turn" and died at the scene.

"Unfortunately there was a parachuting incident where a parachute failed to open up," he said.

"Once the parachute didn't open, there were emergency attempts made to open up the chute and unfortunately, couldn't open the chute.

"As a result of that, we have a deceased male. I believe the instructor may have cushioned a lot of the blow for the client."

The injured passenger, understood to be a man aged in his 50s, was flown to The Alfred hospital with a broken leg.

Police will prepare a report for the coroner and investigate the crash alongside the Australian Parachute Federation and WorkSafe.