Three Kiwis who spent a cold night on an Australian island after their boat flipped have been found safe and well.

Scott Olsen, 27, Tim Harte, 27, and Campbell Banks, 24, were fishing in Western Australia waters when their boat broke down and overturned, forcing them to swim 500m to the nearby Wedge Island.

Wedge Island is 180km north of Perth.

The trio shed their clothes and swam in shorts to the island, uncomfortably aware of news of recent WA fatal shark attacks, the West Australian newspaper reported.

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Mr Olsen was carrying a lighter was able to light a fire on the island, helping to protect the men from the rain and cold.

The fire drew the attention of a man passing by on a boat this morning and he alerted searchers, who were hunting for the men after loved ones in Perth raised the alarm when they didn't come home.

All three work in WA but were born in New Zealand.

Speaking from Lancelin Police Station this morning, Mr Olsen said he felt lucky to be alive.

They were not carrying flares or an EPIRB (radio beacon) signal on their boat.