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The townsite of Vasse is located in the south west, 240 kilometres south southwest of Perth and 11 kilometres south west of Busselton. The townsite is named after the nearby Vasse River and Vasse Estuary, both of which are named after a French seaman, Thomas Timothee Vasse who was believed to have drowned here in June 1801. Vasse was a helmsman on the Naturaliste, a ship which was part of a French scientific expedition to Australia in 1801-03. He was washed overboard and lost, and the river was consequently named in his honour. In 1838, G.F. Moore interviewed the aboriginals about Vasse and noted in his diary that Vasse had not been drowned but died later from anxiety, exposure and poor diet.

Vasse townsite was formerly part of the Busselton Commonage reserve, an area set aside in 1879 for the common use of Busselton residents. In 1898 the land was inspected by the Department of Agriculture, and was proposed as suitable for subdivision into five and 10 acre blocks for dairying in support of the soon to open Busselton butter factory. The good land in the area was swamp land, and release of lots was delayed pending drainage. When subdivision was finalised in 1906, the surveyor suggested the area be named Vasse after the river, and the townsite of Vasse was then gazetted in 1907. The townsite is very elongated and covers three separate areas. Vasse Siding on the Busselton-Margaret River Railway was named in 1923.