The townsite of Lake Clifton was developed in 1920 as a result of the W A Portland Cement Co. seeking to mine a lime deposit there. A railway to Waroona was built and the local Progress Association sought the declaration of a townsite for the company's employees. The town was initially gazetted as Leschenault in 1921, but this name was seen as too confusing because of the name's connection with Bunbury. It was then renamed Garbanup, but the Railway Department complained as this was too similar to Dardanup, so in 1923 it changed again to Lake Clifton. For a short period it was a busy company town, but the mine closed at the end of 1923 and the railway was removed and transported to Lake Grace for use in a railway to Newdegate.