Dennis and Henry are Australian sea lions and this is their territory: Baird Bay, a tranquil spot on the Eyre Peninsula, in South Australia. They live and breed on a little island in the bay, where their patrons are Trish and Alan Payne, respected eco-tourism operators who take small groups of visitors out to meet them.

This is one of a very few places in the world where you can swim with sea lions in the wild, and it is a remarkable experience. It takes place entirely on their terms; there is strictly no feeding, and the humans wait to be approached. If the animals are not in the mood, they are left alone.

In practice, this rarely happens, because sea lions - despite their rather grumpy image - love to play and interact with people. "They're really gentle creatures, unbelievably friendly, quite exceptional," says Alan.

The Paynes, who are from Western Australia, visited Baird Bay on a motorbiking holiday and decided to move there. They have built two beautiful apartments overlooking the deserted beach, where flocks of pelicans congregate on the sand and cormorants and herons use the calm waters as a landing strip.

Baird Bay, a little fishing village, is well off the beaten track, about 460 miles north-west of Adelaide. As well as the sea lions, which are an endangered species, the bay is home to a healthy population of dolphins. West of the township lies the Nullarbor Plain, a massive, barren chunk of limestone that separates the population centres of south-eastern Australia from south-west.

The Paynes have been swimming with the sea lions and dolphins since the early 1990s. It was the animals that initiated it; an inquisitive young sea lion approached their boat one day when they were out fishing, and Alan could not resist slipping into the water.

Trish has developed a special affinity with the dolphins, while Alan, a tough-looking former sheep shearer, has a similar relationship with the sea lions. Dennis, his favourite, used to swim up and lie in Alan's arms, resting his head on his shoulder, when he was a pup. He nurses the creatures when they are sick.

As we draw near, Alan calls out, "Hey girl, what you up to?" to a cheeky-looking female. The sight of him sends the sea lions manic with excitement, and soon a group of them are circling our small boat.

The sea lions are plainly keen to frolic. As soon as we enter the water, they glide towards us. Diving down, they nudge us playfully with their noses and copy our movements, rolling over and performing acrobatics. They plunge down beneath us and lie on the sandy bottom, looking up at us adoringly, like Labradors. It is utterly enchanting.

So why do sea lions have the reputation of being snappy close up? Trish blames human behaviour towards them in the past. When she first moved to Baird Bay, the fishermen told her that "the only good sea lion is a dead one". She says: "They just see them as great lumps of blubber that eat their fish."

By getting to know them and treating them with respect, the Paynes have restored their instinctive trust. But Trish adds that while they are friendly in the water, where they are in their own environment and completely in control, they can still be hostile when approached on the beach, where they sleep.

"It's like rocking up at someone's house at 2am after they've had a hard night out and waking them up. It's their bedroom and you're disturbing their privacy."

About 70 sea lions live on the island; people are not allowed to land. From the boat, we can see a black pup racing around in circles, chasing the shadows of birds flying overhead.

That evening the Paynes barbecue a fantastic array of seafood for us; it is a meal to savour and remember. But it is the sea lions gambolling underwater, and the little pup on the island, that stick in my head.

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