Thousands of evacuees sheltered on beaches Thursday when a fast-moving firestorm isolated two coastal villages after burning as many as 20 houses in a third hamlet.

About 7,000 people, many of them summer vacationers, ran for their lives Wednesday night when the inferno raced into Sussex Inlet, about 120 miles south of Sydney, police said.

The blaze swept north Thursday afternoon, cutting off roads to the nearby towns of Bendalong and Berringer Lake and trapping 2,000 people, said local Rural Fire Service spokeswoman June Webster.

The blaze was one of more than 100 "black Christmas fires" that have brought havoc to Australia's most populous state for 11 days, racing across hundreds of thousands of acres of wilderness and farmland.

No lives have been lost, but more than 160 houses have been destroyed north, west and south of Sydney, a city of 4 million people. Fires were also burning in scrubland in its northern suburbs, threatening hundreds more homes. Insurance officials estimate damages at $36 million.

About 20,000 firefighters are battling flames in tinder-dry New South Wales state.

Helicopters dumped water on fires. In some places, fire crews pumped water from backyard swimming pools, or even used buckets.

"We were in the eye of the storm," said Julie Adler, who saw the fire at Sussex Inlet. "We had fire all around us. It was absolutely horrendous."

Many people braved choking smoke and a fast-moving wall of flames as they drove from the town. Firefighters, mostly volunteers, frantically went house-to-house, hoping to save lives.

Other residents, cut off by 50-foot flames that jumped roads, sought safety on the beach and in nearby community club houses.

More than 300 people slept in tents erected on a football field at a nearby navy base. Many remained Thursday, too frightened to move amid fears erratic winds might whip up new fires.

Later, the fire raced around Bendalong and Berringer Lake where residents also sought safety on beaches.

Other big fires were reported in the Blue Mountains, 50 miles west of Sydney, where many residents left their homes as a precaution.

Officials denied allegations that the blaze south of Sydney was the result of bungled backburning by overworked and fatigued fire crews.

At least half of the wildfires have been deliberately lit since the crisis started Christmas Eve. Police have arrested 21 arson suspects.

These include 14 children, aged 9 to 16, characterized as troublemakers bored during a school vacation.

An outraged New South Wales government promised to punish the offenders for what Premier Bob Carr called acts of ``madness and wickedness.''

While adult offenders would face prison terms of up to 14 years, young arsonists would likely have to confront burn victims and families who lost homes. They would work on rehabilitation projects for scorched forests.

Temperatures fell Thursday, bringing some relief after climbing above 100 degrees earlier this week. But there was no sign of rain and winds roaring in from Australia's arid outback fanned flames and scattered red hot embers, sparking new blazes.