A bushfire in Western Australia's southwest that forced the evacuation of hundreds of residents and tourists is being treated as suspicious.

Arson detectives are investigating the blaze, which started in the Meelup Regional Park near Curtis Bay Beach on Monday night and has since burned through 225 hectares of bushland around the popular Dunsborough area.

It's believed no properties have been lost.

An emergency warning has now been downgraded to "watch and act", although people are being warned to remain on alert in case conditions change.

Police are seeking information from anyone who saw suspicious activity in the Meelup park on Monday between 6pm and midnight.

"Rewards of up to $25,000 are available for information that leads to the identification and conviction of an arsonist," WA Police said on Wednesday.

Ninety firefighters are continuing to strengthen containment lines and protect properties.

Hundreds of people were left stranded in the tourist hotspots of Eagle Bay and Bunker Bay before being evacuated on Tuesday afternoon.