It seems strange, but here in Australia, dance music fans still haven't yet fully embraced the now pervasive, nu-disco-related dance music scene and its anything-goes musical policy. Around the world, international labels like DFA, Full Pupp, Permanent Vacation and more consistently feed a tight-knit, self-sustaining community headlined by key tastemakers such as Tim Sweeney, Todd Terje and Horse Meat Disco.

This groundswell hasn't yet received the same attention in Australia, a country which has taken longer than expected to break the formulaic shackles of electro-house. Though an increasing number of Australian DJs now peddle a disco-influenced style and new nights do pop up, the larger crowds aren't yet buying and only a small number of local producers are reflecting the sound with any impact.

Which is exactly why the Perth-born, Sydney-based duo Canyons have attracted extraordinary attention overseas, while thus far remaining relatively unknown in their own backyard. Just last August, Leo Thomson, AKA Leo Holiday, and Ryan Grieve, AKA Ryan Sea-mist, travelled to the US for seven DJ gigs, headlining People Don't Dance No More's DFA Boat Party in New York, playing the Central Park SummerStage with Boys Noize and Drop the Lime, and spinning at high-profile parties in Los Angeles, San Francisco and Palm Springs, the latter a "surreal" pool party out in the California desert.

"The boat party in New York was amazing, because it was actually a Canyons party!" recalls Grieve excitedly. "We played to a really receptive crowd of 300 people. The boat departed Manhattan at midnight, cruised along under all the amazing bridges and out to the Statue of Liberty. It was a great success and one we'll not forget anytime soon."

These sorts of breaks primarily came about through the pair's relationship with DFA. Justin Miller, the label's A&R assistant, dropped the first release from Canyons' record label Hole in the Sky into a DJ mix that he and Jacques Renault prepared for Fact Magazine in 2008. Canyons e-mailed Miller to thank him, and, eventually, resulted in the release of the band's Fire Eyes / Dancing on Silk single on DFA last August.

"From all accounts, it's done well," says Grieve of the DFA single. "They're really happy with it, especially considering we don't have an album to tie it to. We're super happy, it's been really great for us, and those guys are awesome to work with. It's just been a really good experience all around."

"Fire Eyes" is a shimmering, rough around the edges, jack-house throwback, with a growling diva vocal from a mysterious Sydneysider named Delilah. "I was at a friend's monthly party called Paradise Lost," recalls Grieve of his first encounter with Delilah. "They'd taken over this run-down old strip club, which was pretty funny. The DJs were playing on the catwalk and wearing leopard print shirts. I was talking to someone when I heard [Grace Jones'] "Pull up to the Bumper." I thought nothing of it, though it seemed a little different, maybe an alternate version I hadn't heard, until I turned around and saw Delilah on the stage.

"It was amazing. It sounded exactly like Grace Jones! I talked to my buddy who was throwing the party, and he introduced us and arranged for us to go and have a beer with her the next week and talk about working together. We wrote the words in about five minutes, while she was in the room with us, and just worked to get it right over a bunch more sessions."

It wasn't always this easy. Grieve and Thomson are both from Perth, the remote west of the continent, and grew up on a steady diet of metal, hip-hop, soul, funk, folk, the Beatles, classic rock, psychedelia and soundtracks. While Grieve muses that the club scene in Perth was never particularly momentous, they both found the right places to feed their curiosity in the new sounds they were picking up on.

"When I was 14 or 15," Grieve recalls, "I'd go out with my cousin who'd sneak me into the clubs he used to go to, which played house, old-school and classic stuff, like jungle. This was a pretty amazing time for me, around '93 or '94, and the general vibe in the clubs I went to was great. I'd heard dance music before and liked it, but had never heard it in a club environment and over a proper sound system. As I'd always been around guitars, live drums and rock and roll, the sounds were so refreshing and exciting."

Thomson came at things from a different angle: "My interest in hip-hop led me into older music such as soul and all the stuff that's sampled heavily," he says. "From being into soul, disco started to appeal and make sense to me, and from there, the connection between disco and house was an easy one to make. Also, I really liked electro like Man Parrish, Twilight 22 and Newcleus...The DJs I would initially go out to see were guys like Krush, J-Rocc, DJ Spinna and DJ Scruff, artists that would play a wide variety of stuff and vary the tempo."

The duo met through mutual friends towards the end of high school, and minted their Hole in the Sky label in late 2007 before even recording anything together. Only a couple of acts were initially signed to the label, the most prominent of which was Western Australian psych-rockers Tame Impala (now signed to Modular), for whom Canyons have remixed various tracks. In its early days, the imprint was populated by a series of nom de plumes Grieve and Thomson invented for themselves (Leo Frostwave, Fred Cherry, The Templates). "We didn't have a distributor," says Thomson, "so we wanted to create the impression that we had more things going on with the label than we really did. It was just a way of making it seem like there were more artists on Hole in the Sky."

Although there has been little in the way of activity on Hole in the Sky for the last 12 months, that has begun to change recently. In November of last year, they released the vinyl version of a new four-track edit EP, Favicon, by Jacques Renault. There will be forthcoming 12-inch singles for Milan producer Robotalco, Rong / DFA affiliate Scotty Coats, Sydney band Tortoise Shell and new signing Pink Gin. Next month, the label will release an album by new Perth band (and Tame Impala side project) Pond, who Grieve intriguingly describes as "a cross between Elton John, Bowie and Queen, with a crazy psychedelic edge."

For the foreseeable future, though, Canyons own material will largely see the light of day via Modular. The group inked a deal with the Australian imprint on the strength of The Lovemore EP, their debut for Hole In The Sky, their second single, Blue Snakes, which saw the light of day on DJ/producer Cosmo Vitelli's compilation Moments of a Crisis and the aforementioned DFA single.

As a result of these associations, Canyons have been embraced by the dance music community, but Thomson and Grieve aren't keen on being typecast. "I don't know if we're into one (rock or dance) more than the other actually," considers Grieve. "I guess we're perceived as a dance act at the moment.... Also, because we haven't gone live yet, we've just been DJing, so I guess that's shaped a lot of what we've written in the last couple of years. But now that we're writing an album, it's going to be a lot different."

Currently bunkered down in their Surry Hills studio in Sydney, Grieve and Thomson have laid down the majority of the music for the full-length and are currently working with vocalists and deciding who else to collaborate with. "There's still going to be that element of straight-up dance tracks," concedes Grieve, "but there's also going to be more songs and more pop-influenced arrangements. We've really been trying to focus on writing actual songs."

Thomson explains that some of the lyrical concepts on the album will fit hand-in-glove with their love of psychedelica and its traditionally associated themes. "There is definitely a feel to the music [on the album] that ties it all together," he says. "Sonically, we've just tried to create sounds that are exciting to us and hopefully to others. Probably the most consistent theme, conceptually, would be related to the unknown, or not knowing what's going to happen next and the anticipation tied to that feeling. Things that are kind of mysterious, or perhaps not totally real, also pop up."

While work continues unabated on the album, Canyons will also evolve this year into a proper live touring band. Grieve plays drums and guitar and Thomson plays keyboard, with the duo also earmarking some friends for possible duties, though no one is signed up yet. But there will be at least four people involved in the band, perhaps more.

In the meantime, Canyons have been dragging their record bags around an array of Aussie music festivals, as well as making a monthly trip from Sydney to Melbourne for a residency at infamous Melbourne club, Sorry Grandma!, run by the ex-owners of former Melbourne clubbing institution, Honkytonks.

Although always eager to rock the dance floor, their free-wheeling DJ sets, which span disco, Balearic, early-house, acid-funk, tribal, cosmic, psychedelic rock and '80s boogie, still successfully manage to straddle the rock and dance divide. "When we're at a club, people generally want to dance," says Thomson, "but we'd actually love to play slower tempo house and stuff like that. You lose people's attention pretty quickly if you do that [though]. The thing is, our tastes are very broad in what we listen to, and that filters through when we DJ."

"I guess we're just trying to play something that's interesting, has soul and is fun," adds Grieve. "People want to go out and have a good time, so we want that to happen, but if people want to get into a heavier type of thing, that's there as well, you know? If you come see us DJ, it's going to be loose, but it's going to be really good fun when we play. That's what we program for."