A fast moving and out-of-control bushfire that was threatening lives and homes near a small WA township about 60 kilometres east of Perth has been downgraded to a watch and act.

The fire started at the intersection of Werribee Road and Vineyard Road in Wundowie, in the Shire of Northam, and was first reported at 3:45pm.

The Department of Fire and Emergency Services (DFES) issued the emergency warning over concerns homes on Hawke Avenue were under immediate threat from the fire.

Authorities say while that threat has now eased local residents should remain alert in case conditions change.

The bushfire watch and act is in place for people in an area bounded by Werribee Road, Hawke Avenue and McMullen Road.