The alarm had been raised after locals spotted the family in the rising tide at Taieri Mouth and emergency services were called about 6.15pm.
When the family finally reached the beach about 7pm, the youngest child was crying.
Emergency services provided blankets for the wet and cold family and then assisted them to a private home to warm up.
King's High School pupil Oliver Edmonds (13), of Taieri Mouth, said he saw the family walking to the island at 5pm.
''When they were coming back they started getting wet and started drifting out.''
As darkness descended, he could hear them yelling for help.
Taieri First Response member Nils Barth said low tide was at 4pm and the family had ''mistimed setting off'' on the walk.
The family were holidaying at a Taieri Mouth camping ground in a house-bus.
Otago Regional Rescue Helicopter paramedics Ian Ridley said none of the family needed hospital treatment. The children were aged from 2 to 11, he said.
Oliver said the island could be explored for about an hour at low tide, but the walk to the island, about 40 minutes, needed to be started before low tide.
''They didn't pick the right time to go,'' he said.
''You don't realise how long it is until you start walking.''
People walked to the island to see the seals and penguins.
