Milne, the mother of Barnard's son, said the former Civil Co-operation Bureau agent confessed to her that he killed anti-apartheid activist David Webster in May 1989.
Barnard and Milne lived together from December 1987 until she left him early in 1996.
She said Barnard had told her that he almost killed Omar months after the Webster murder.
Barnard is facing 34 charges, including murder and attempted murder charges relating to Webster and Omar. He has pleaded not guilty.
Milne kept notes of everything Barnard did from January 1994. She said at that stage she firmly believed her lover would kill her, as he had threatened to do so many times.
She did not want her child to grow up with him and she wanted the truth to be known about the man if anything happened to her, she said.
"The whole lifestyle with him was a nightmare... there was a lot of crime going on, he took drugs and was an alcoholic."
Milne said Barnard was addicted to pornography and womanising.
"Life with him became unbearable," she said.
She said she spied on Barnard, taking pictures of him playing with his favourite sawn-off shotgun called Buks Benade.
"He would hold it, play with it, threaten me with it. He would take it with him when he went out on a job. He threatened people with it," she said.
Milne said Barnard, as part of his duties while working for the secret Defence Force agency, the CCB, monitored several activists.
The information would be given to his bosses, whereafter authorisation would be given to eliminate these people.
"I've seen the list. David Webster's name was on it." Other names included Anton Roskam, Bruce White, Gavin Evans, Jay Naidoo, Frank Chikane and Vali Moosa.
"I accompanied him a number of times when he monitored Dr Webster," she said.
Milne said they also monitored Anton Lubowski, Evans, White and Naidoo. This meant driving past their houses or the places where they worked.
"He already had a lot of computerised information about Dr Webster, which he got from a policeman at Brixton. On May 1, 1989, the day that Dr Webster was killed, he came home and told me had shot him."
Webster was gunned down while taking a plant from a bakkie next to his house.
Milne said her white Ford Laser was used on the day Webster was murdered.
Milne said she wasn't surprised when Barnard broke the news to her, but she hadn't expected it to happen in the day time.
She said Barnard gave her different versions of what he did with the gun used to kill Webster. One was that he threw it into a dam and another was that he gave it to his father.
Milne and her son went into hiding for a week after Webster's murder and then went on an extended holiday - for which Barnard gave her R15000 - during the Webster inquest.
Barnard paid for the holiday because he did not want Milne to talk to the press or the police, she said.
Milne said Barnard went to Cape Town to monitor Dullah Omar in September 1989 on the orders of his CCB superiors. He was to kill the then African National Congress activist.
After tracking Omar's movements, Barnard waited in a garage with his silenced gun and wanted to shoot him.
Omar was saved by a woman who climbed into his car with him, an unexpected move that changed Barnard's plan.
After the aborted mission, Milne said whenever Barnard saw Omar on television, he would wonder whether Omar knew how lucky he was to be alive.
She said Wits University activist Anton Roskam's car was set alight one night.
Roskam, who is now an attorney, previously testified that he received threatening letters after his car was set alight.
One of the letters said if he continued with his left-wing activities, the same thing that happened to Webster would happen to him.
Milne said Barnard told her how he and one of his friends, Eugene Riley, killed Mark Francis with a metal baseball bat, which they called "tonk" because of the sound it made.
Frances was allegedly murdered because Barnard feared he would make a statement incriminating him in a Bophuthatswana robbery.
Milne claimed Barnard on one occasion broke into her father's home and stole family photos after a fight, during which he accused her of seeing her former husband again.
The trial continues on Tuesday.