Yarloop, south of Perth, was worst hit, with at least 130 properties destroyed.
State Premier Colin Barnett has said the town will be rebuilt.
The blaze, covering some 70,000 hectares, is approaching Harvey.
Yarloop is being evacuated and emergency warnings remain in place for Waroona and other areas.
Winds of up to 37mph had fanned the blaze, known as the Waroona fire, to heights of 150ft.
The strong winds have now eased, but the fire, which began on January 6, remains unpredictable.
“We’re seeing conditions that we’ve not seen before on this type of fire, particularly when it went through Yarloop,” Western Australia Fire Commissioner Wayne Gregson said.
Some 250 firefighters are reported to be deployed, and reinforcements are being sent from New South Wales.
Premier Colin Barnett, visiting Yarloop residents at an evacuation centre, said the town would continue “but probably not a Yarloop of its previous size”.
It remains unclear how many of the town’s more than 500 residents will be able to return.
Four firefighters were injured battling the blaze in Yarloop and one fire truck was destroyed.
The loss of property in Yarloop is described as “significant” with the pub, bowling club and historic timber workshops destroyed.
The Western Australia bushfire comes less than a month after southern Victoria was struck by similar blazes.
More than 100 homes were destroyed by an outbreak on Christmas Day.
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