A group of school children were on a dolphin spotting cruise when emergency services responded to reports of a fire onboard.
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Police said 22 passengers, including school children, were on the boat off the coast of Queenscliff in Victoria's Port Phillip Bay, when an engine bay issues reportedly started around 8.30am on March 21.
The boat touring company, Sea All Dolphins Swim, said "engine room smoke triggered our procedure to transfer clients to the ferry".
"The vessel is fully operational and was able to drive back to dock by itself," tour operator James 'Murph' Murphy said.
"After returning to the dock [Country Fire Authority] and water police went through the vessel and both indicated there was no evidence of a fire," he said.
"They presumed it may have been due to the engine overheating causing the oil to smoke.
"Massive thanks to all involved throughout the incident, it is a very tight nit community and we saw such professionalism from everyone involved."
Ferry detours for heroic rescue
"A ferry and a Parks Victoria vessel were quick to respond," Victoria Police said.
The Sorrento to Queenscliff ferry detoured from its route to attend the rescue, a ferry passenger confirmed to 3AW on the morning of March 21.
The passengers were safely evacuated onto the Queenscliff ferry and there have been no reports of injuries, emergency services confirmed.
The kids were wearing life jackets and were "all good", the ferry passenger said.
Police said the exact circumstances surrounding the engine issues are yet to determined but it's not being treated as suspicious.