Photograph likely to become one of the defining images of a disaster that has seen wildfires sweep south-eastern Australia

The tornadoes of fire came from two directions. They quickly engulfed the small Tasmanian fishing town of Dunally, and swept towards the home where Tim and Tammy Holmes were babysitting their five grandchildren. There was no escape. No way out. And so the family did the only thing left open to them: they ran for the water.

This extraordinary photograph shows Tammy Holmes, second from left, clutching her two small grandchildren, two-year-old Charlotte Walker, left, and four-year-old Esther Walker. Clinging precariously to a wooden jetty are Liam Walker, nine, Matilda, 11, second from right, and six-year-old Caleb Walker. Behind them are walls of flame, the sky a lurid and demonic orange.

"We saw tornadoes of fire just coming across towards us and the next thing we knew everything was on fire, everywhere all around us," Tim Holmes told Australia's ABC News. "We lost three houses and by that time I had sent Tammy … with the children to get down to the jetty because there was no other escape. We couldn't get off.

"I ended up having to run down through a wooded area on my own, where there was so much smoke and fire, I didn't know where I was. So I just kept running. There was a moment of fear that this could be very, very dangerous. But I managed to run through and get to the water's edge, which was a kind of a sanctuary."

The photograph – taken with remarkable composure by Tim Holmes – is likely to become one of the defining images of a disaster that has seen wildfires sweep south-eastern Australia. The blazes are the result of a record-breaking heatwave and strong winds. Since last week they have destroyed thousands of hectares of land and numerous properties. Among them are the pottery, craft gallery and B&B where Holmes, born in Wales, had lived on Tasmania's picturesque eastern coast since 1988. Remarkably, nobody has been killed.

Other photographs taken by Holmes show his grandchildren perched on the edge of the jetty. They are about to plunge in. He explained: "We were relying on the jetty really. And the difficulty was, there was so much smoke and embers and there was only about probably 200 to 300 millimetres of air above the water. So we were all just heads, water up to our chins just trying to breathe. The atmosphere was so incredibly toxic."

The fire raged for three hours. "Everything was on fire and it was just exploding all over the place," Holmes said. The children – three of them non-swimmers – clung on in the chilly sea. Eventually, Holmes managed to return to the shore and grab a small dinghy. He loaded in the children and his wife and then took the boat 200m out from the coast, where the air was more breathable.

The fire rolled into Dunalley last Friday. It destroyed the local church, the school, the old hall and around 90 houses. The children's mother, Bonnie Walker, set off for a funeral just before the flames appeared. By the time she reached the highway the blaze had engulfed the entire area.

"The road closed behind me," she told ABC News. "We just waited by the phone. We received a message at 3.30pm to say that mum and dad had evacuated, that they were surrounded by fire, and could we pray. So I braced myself to lose my children and my parents."

She described the photo of her family holding on beneath the jetty as upsetting. "It's all of my, our, five children underneath the jetty huddled up to neck-deep seawater, which is cold. We swam the day before and it was cold. So I knew that that would be a challenge, to keep three non-swimmers above water."

Her husband, David, had been hiking elsewhere. The family were eventually reunited in the Tasmanian capital, Hobart.

Record temperatures across southern Australia cooled on Wednesday, reducing the danger from scores of raging wildfires, but probably bringing only a brief reprieve from the summer's extreme heat and fire risk.

Australia had its hottest day on record on Monday with a nationwide average of 40.33C (104.59 F), narrowly breaking a 1972 record of 40.17C (104.31 F). Tuesday was the third hottest day at 40.11C (104.2F). Four of Australia's hottest 10 days on record have been in 2013.

"There's little doubt that this is a very, very extreme heatwave event," said David Jones, manager of climate monitoring and prediction at the Australia's Bureau of Meteorology.

"If you look at its extent, its duration, its intensity, it is arguably the most significant in Australia's history."

The risk from fire is expected to increase later in the week as temperatures rise again.