Kenneth Hall, 72, and his wife, Mary, 70, from Bootle, Merseyside, were at the market in Finestrat, near Benidorm, when torrential rain caused a river to burst its banks at about midday on Friday.
The Halls are understood to have been dragged away in the current as water flowed through the marketplace, overwhelming cars and stalls. According to local reports, the couple's bodies were found trapped under a trailer. Two other people were taken to hospital, while a 90-year-old was missing but was later found unharmed in a nearby street, according to Spanish media.
The couple had three sons, Kenneth, Keith and Chris, and a daughter, Carol, who had recently given birth. The Halls had also recently become great-grandparents.
Friends described the retired holidaymakers as "the most devoted couple you would ever want to meet". The couple, who were on holiday in the area, were shopping at the market when a wave up to a metre high surged through a ravine and hit traders and customers.
Questions are now being asked about whether the incident could have been avoided after it emerged that the local council had been fined for building the marketplace on a ravine bed without obtaining the necessary permission.
The ravine bed was covered with an asphalt base that can prevent water from draining away during thunderstorms. The Spanish environment ministry had told the council not to hold public events there until further work had been carried out, according to local reports.