Blanket Bay is a small, east-facing cove on the Bass Strait side of Cape Otway, known to most Victorians as one of the best bush campgrounds in the Otways rather than as a dive site. A tidal creek runs into the bay, forested slopes come down to the western end and a line of rocky reef closes the eastern side, so that inside the intertidal reef the water is often calm when the rest of the cape is a mess. In the 1880s a jetty here landed supplies for the Cape Otway lightstation, and its stumps still show at low tide near the eastern end of the beach. The diving is over the reef that protects the bay and along the rocky shore to the east: a jumble of submerged rocks, slabs and kelp-filled gutters in 3–10 m, carrying the dense brown algae, bull kelp and encrusting invertebrates that characterise the Great Southern Reef along this coast. Southern rock lobster and abalone are common enough that the bay is popular with spearfishers and cray divers, and schools of ocean-going fish – sweep, salmon, trevally and the occasional kingfish in summer – move through the deeper water off the point. Wrasse, magpie perch, zebrafish, leatherjackets and Port Jackson sharks are the reef regulars, and the intertidal rock pools on the platform are rich enough that Parks Victoria promotes them for snorkelling.

This is a good site for a camping trip on a settled summer week: the entry is a sand beach, the lagoon is shallow and forgiving for snorkellers, and the reef outside gives divers an hour of interesting, if not deep, exploration. The Scuba Doctor's warning still stands that weak or average swimmers should not dive here; once outside the reef you are on an exposed coast and conditions change quickly. It is the easiest introduction to the Cape Otway coves and the one to try first before committing to the more exposed Parker Inlet, Point Franklin and Crayfish Bay.

From Apollo Bay follow the Great Ocean Road (B100) west for about 20 km and turn left onto Lighthouse Road (C157) toward Cape Otway; after about 6 km turn left onto Blanket Bay Road, a winding unsealed track that ends at the Blanket Bay campground after 6 km (2WD in dry weather). Park in the day-visitor area and walk 50–100 m down to the beach. The beach faces east with forest on the western side and rocky reef on the eastern side; the remains of an 1880s supply jetty are visible at low tide.

Enter from the sand and swim out over the sheltered lagoon to the reef edge. No boat access; allow 3 hours from Melbourne.

Cape Otway is the most exposed headland on the Victorian coast and all of these coves face the open Southern Ocean or Bass Strait. Diving requires a day of exceptionally good weather: calm seas, no swell (under about 0.5 m) and no rough weather forecast, which in practice means summer and autumn under a high with offshore north to north-westerly winds; an offshore wind will flatten the sea inside the reefs. Waves average 1.5 m outside the reefs even on ordinary days.

Southerly through westerly winds and any swell over a metre make every entry dangerous. Conditions change quickly and a calm morning can be unworkable by midday. Walk to the point and look before gearing up.

Blanket Bay faces east and is the most protected of the Cape Otway coves; westerly winds flatten it and waves at the beach are usually under 1 m, but easterly seas come straight in.

Enter from the beach, fin across the lagoon in 1–3 m and pass out through the reef gap on the eastern side. Follow the outside of the reef south-east along the rocky shore in 4–8 m, exploring the submerged rocks and kelp gutters, to a maximum of 10 m. Turn at half gas and return along the inside of the reef to the beach; the old jetty piles near the eastern end are worth a look on the way back.

No operator – campers, spearfishers and independent divers on calm days only.