The footage, taken from a Harrier jump jet, shows a bomb dropped from the aircraft heading for a Taliban commander in a vehicle. Just seconds from impact, the vehicle stops next to a civilian compound.
If the bomb had hit its target, several innocent Afghans would have been killed, but the quick-thinking RAF officer is seen to move the bomb into a safe area of desert where it detonates.
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The Harrier pilot - who wishes to remain unnamed - said:
"One task for fast jet pilots in Afghanistan is to conduct targeted strike operations against confirmed Taliban commanders. In this instance I found and tracked the target and had deployed my weapon.
"However, as it was flying to the target I saw the vehicle stop amongst civilians. Every pilot dreads the prospect of inadvertently causing harm to any innocent civilian - so I knew I had to act immediately.
"The Paveway IV smart bomb is amazingly accurate and incredibly flexible. I can control it whilst it is still in flight - so I used my onboard laser to guide the bomb into a safe area of open desert.
"It's a shame I couldn't prosecute the target as we had planned, but it was much better to let him go free this time than risk killing innocent civilians.
"In any case, this Taliban commander didn't get away for long - we continued to track him and he was successfully attacked a couple of days later when the moment was right."
The Paveway IV was introduced in 2008 and gives pilots in Afghanistan the ability to control the smart bomb all the way to the target, which limits collateral damage even after the bomb has been released from the aircraft.
The newly released video shows a positively identified senior Taliban commander in his car driving from the top to the bottom of the screen. The Paveway IV precision-guided munition is already in flight and is being guided towards the commander's car by the Harrier pilot using a laser which is directed through the cross-hairs on the screen.
As the vehicle approaches the road junction it makes an unexpected stop close to civilian buildings and unidentified civilians. A short conversation between the pilot and his ground commander takes place regarding the nature of the civilian personnel. During this reassessment of the Taliban commander as a legitimate target, the Harrier pilot deliberately starts to drag the cross-hairs away from the vehicle.
The ground commander then confirms that the people visible close to the civilian buildings are not enemy forces. Consequently, to avoid collateral damage, including civilian casualties, the Paveway IV is guided by the Harrier pilot into the open ground to the right of the screen where it detonates. All civilians in the area survived and there was no damage to the Afghan property.
Wing Commander Harv Smyth DFC, Officer Commanding of IV (Army Co-operation) Squadron, a front line Harrier squadron, said:
"This shows there is more to being a pilot than just flying the aircraft and dropping bombs. It is all about having a range of options and making the right decision at the right time."