All 60 people forced overboard after their tourist boat caught fire off the coast of New Zealand have been rescued, according to authorities.

Police spokeswoman Kim Perks said the blaze broke out as the PeeJay was returning from White Island to the town of Whakatane.

She said all 53 passengers and seven crew members were forced overboard to escape the fire and smoke.

She said one passenger and one crew member were taken to a local hospital after suffering minor injuries and smoke inhalation.

Ms Perks said the boat was about 1km from shore when authorities were first notified of the incident, and they called on nearby boats to assist.

She said the PeeJay crew then sent a mayday to say they were abandoning ship.

Ms Perks said four other private vessels and the New Zealand Coastguard were able to get to the scene quickly and rescue everybody. She said the PeeJay later sank.

White Island, 50km off the coast of North Island, is volcanically active and popular with tourists.

White Island Tours, which operated the tourist boat, was not immediately available for comment.

Whakatane resident Roger White told the Associated Press it was raining at the time of the incident but he could see some of what unfolded from his home.

He said he saw some light smoke coming from the front of the vessel which then got heavier. After about 10 minutes, he said, the cabin burst into flames and fire quickly engulfed the boat.

He said it appeared some evacuated on to two small dinghies while he could see the figures of others still on board as the flames grew larger. He said it was hard to make out but believes those people must have then leapt into the water.

Mr White said plenty of boats arrived quickly to help out, including a fishing boat and some charter boats, which assisted the Coastguard in the rescue.