The fire, which had already razed 53,000 hectares of land this week, struck Yarloop, a small rural town south of Perth, on Thursday night.
"I believe we've had what I would suggest are catastrophic losses within Yarloop," Wayne Gregson, Western Australian Fire and Emergency Services Commissioner, said on Friday.
Local media reported that 95 homes were destroyed, along with the post office, shops and the fire station, in the town which has a population of just 545, Al Jazeera reported.
The bushfire in Western Australian is the latest in a series of fires that have razed parts of the country amid sustained hot and dry weather.
Wildfires are an annual summer event in Australia but rising temperatures have prompted some scientists to warn that climate change could increase the length and intensity of the summer fire season.
Australia experienced its fifth hottest year on record in 2015, according to the Bureau of Meteorology, which has been keeping statistics since 1910.