The number of homes lost in a bushfire in Western Australia rose on Saturday to 121, as officials admitted the emergency was not yet over with three people still unaccounted for.

Fire tore through Yarloop, some 110 kilometres (70 miles) south of Perth, early on Friday, destroying scores of homes in the old mill town.

That number rose to 121 on Saturday after a fuller assessment, as hundreds of firefighters continued to battle the huge blaze which is still threatening nearby areas.

"It is still a cause for concern," Fire and Emergency Services Commissioner Wayne Gregson told reporters of the blaze.

"It has been a very challenging fire for us -- it's still a challenge, (we're) not out of the woods yet."

Gregson said three people who were unaccounted for on Friday had not yet been located.

"We're holding our hopes out that they got out early and heeded the warnings," he said.

"It's just the fact that we are not able to account for them. In the fullness of time, hopefully, we will account for them."

Western Australia's Premier Colin Barnett said the event had been declared a natural disaster, a measure which gives residents access to greater financial support.

But he admitted that the damage bill was going to be a "large one".

Bushfires are common in Australia's hotter months, with four deaths in Western Australia last November.

Australia's worst firestorm in recent years devastated parts of the southern state of Victoria in 2009, razing thousands of homes and killing 173 people.

Raging bushfire devastates Australian town
Perth, Australia (AFP) Jan 8, 2016 - A "catastrophic" bushfire has burnt through an historic town in Western Australia, razing 95 homes and leaving three people unaccounted for, officials said Friday.

The out-of-control blaze 110 kilometres (68 miles) south of Perth more than doubled in size in 24 hours and has now burned through 53,000 hectares (130,000 acres), with a third of the town of Yarloop destroyed.

"I believe we've had what I would suggest [are] catastrophic losses within Yarloop," the state's Fire and Emergency Services commissioner Wayne Gregson told reporters.

"It appears that we've lost around 95 houses, a number of structures within the town site including some of the historical buildings."

Gregson said three or four people had minor injuries as a result of the blaze, which was fanned by strong winds, but added: "Sadly we have three people unaccounted for from Yarloop."

Yarloop has a population of 500-600 with an estimated 250 homes.

Aerial footage showed houses reduced to just their brick fireplaces, leaving only blackened ground and the burnt-out shells of vehicles.

Yarloop resident Ron Sackville told 6PR radio there was "very little" left.

"I look around 360 degrees and everything is burnt to a cinder. The fire was horrendous," he said.

Another resident described the overnight emergency -- initially triggered by a lightning strike -- as like the town was being hit by "fireballs".

"It was crazy. One fireball after another. The wind... it was unbelievable," Alex Jovanovich told the Australian Broadcasting Corporation.

"It's devastating," he said of the damage.

"There's bugger all left. The hall is gone. I believe the pub's gone. The workshops are gone. The old hospital is gone. I think the church is gone."

Hundreds of firefighters were battling the blaze, which has prompted evacuations and an emergency warning for nearby towns and surrounding areas.

"You are in danger and need to act immediately to survive. There is a threat to lives and homes," an official warning said.

Bushfires are a common feature of Australia's summer, with four people dying in November in Esperance in Western Australia's far south, and another two perishing in South Australia.

"The fire is still uncontrolled, it is still very, very unpredictable," Gregson said.