The Phaeton is the 'Composite Wreck' of Cocos dive lists and the 'Coal Barge' of local snorkel guides, and it is a genuinely significant piece of maritime history in very shallow, easy water. Phaeton was a three-masted English barque built at Sunderland in 1868, 46 m long (151 ft) and 9 m broad, of composite construction: a wooden hull and copper-alloy sheathing on iron frames. Diveplanit's site page explains that this 'wooden skin on a metal frame' represents a brief period in shipbuilding between wooden and all-iron vessels, and the WA Museum's inspection report describes the Phaeton as an example of the high point of composite shipbuilding.

In September 1889 a fire broke out in her hold, forward of the helm, which the crew could not contain; she was run aground in Port Refuge, the anchorage in the north-west of the lagoon, about a nautical mile south-east of Horsburgh Island. The official tourism snorkelling feature dates the wreck to 1889 and calls it the Coal Barge. Today she lies in about 4 m, with the bow and midships section intact and upright, its iron frames standing like a skeleton, while the stern has broken up and is scattered across the seabed.

The wooden planking has largely gone, but copper-alloy sheathing remains in places. Diveplanit gives the bottom at 6 m. The frames make excellent habitat: moray eels live in the gaps, parrotfish and other reef fish shelter in and around the hull, and corals have begun to colonise the ironwork, turning the wreck into a small reef.

Snorkellers can swim over and through the skeleton of the ship, and divers enjoy long, shallow dives. It suits everyone, including children with a snorkel, and is a highlight of lagoon tours. Because the wreck is historic and fragile, divers should not touch the frames or sheathing.

Fly to West Island on the twice-weekly Virgin Australia service from Perth (usually routed via Christmas Island; allow 7–10 days on the islands to absorb weather and flight delays). Cocos Dive collects divers from West Island accommodation in the morning (pickup around 8 am, departure about 9 am) and runs its boats from West Island into the lagoon. The wreck lies in the shallow north-western lagoon (Port Refuge), about 1 nautical mile south-east of Horsburgh Island.

Cocos Dive uses it as a snorkel or shallow dive, often around the lunchtime stop, and Cocos Blue Charters' glass-bottom boat tours visit the 'Phaeton ship wreck'. It is too far out in the lagoon to swim from any beach.

Cocos has two seasons. The south-east trades blow steadily from roughly April/May to October, often 15–25 knots, which chops up the lagoon and pushes swell onto the eastern and southern outer reefs; divers are then kept to sheltered sites. The doldrum season (November to March/April) brings lighter, variable winds, flatter seas and the widest choice of outer-reef sites, and is the best time to dive, though it is also the tropical cyclone season and squalls pass through.

Port Refuge, the north-western corner of the lagoon between Horsburgh and Direction Islands, is shallow and protected from ocean swell by the reef, but in strong trades it becomes choppy and the fine sand stirs up, lowering visibility. Dive or snorkel on calm days and around high tide on the incoming flow for the clearest water; tidal streams through the northern passages can be noticeable at mid-tide.

Enter beside the bow and swim along the intact bow and midships section, looking at the iron frames and remaining copper sheathing, then move aft over the broken, scattered stern. Snorkellers can see the whole wreck from the surface; divers can stay at 4–6 m for the whole dive, circling the hull and checking the frames for morays.

Cocos Dive (Dieter Gerhard, West Island, operating since 1990) is the only scuba operator on the islands and the only way to dive this site. It runs seasonal two-dive day trips with lunch and a surface interval on Direction Island, maximum 10 divers per trip; sites are chosen on the day according to wind, tide and diver experience. Trips book out well ahead and courses are currently suspended, so arrive certified.

Cocos Blue Charters' glass-bottom boat and snorkel tours also stop at the Phaeton wreck.