Australian troops had, at Milne Bay, inflicted on the Japanese their first undoubted defeat on land. Some of us may forget that, of all the allies, it was the Australians who first broke the invincibility of the Japanese army. (Field-Marshal Sir William Slim, Defeat Into Victory)

In late August, unable to move further down the Kokoda Trail, the Japanese decided to make a second line of attack on Port Moresby. On 25-26 August they landed at Milne Bay on the extreme eastern tip of Papua, about 370 kilometres from Port Moresby. Although under great logistical stress with the fighting on the Kokoda Trail, Allied forces were ready for them. Unlike the protracted Kokoda campaign, the Battle of Milne Bay ended in just over ten days.

Australian and United States forces had been active in the area since June. These were the 55th Australian Infantry Battalion and the 46th United States Engineer Battalion. The 7th Australian Infantry Brigade Group, made up of the 9th, 25th, 61st Battalions plus anti-tank and anti-aircraft artillery, arrived on 11 July. These forces were joined by II/43rd US Engineer Regiment and other groups of Australian ground forces. Squadron Leader Keith Truscott

The American Engineers were constructing three airstrips on the swampy coastal strip between the sea and the mountains. On 25 July two RAAF P-40 Kittyhawk squadrons, the 75th and the 76th, arrived. There was also part of an RAAF squadron equipped with Hudson bombers. Aircraft played a vital part in the outcome of the battle. The total force of Australians and Americans in Papua at this time numbered 9,000. For the first time the army, navy and air forces came under one commander, the Australian Major-General Cyril Clowes, a Duntroon graduate.

When it appeared likely that the Japanese would land in the Milne Bay region the 18th Australian Infantry Brigade of the 7th Australian Division, a division which had recently returned from the Middle East, was sent in to reinforce the Allied forces already there. It was commanded by Brigadier George Wootten and comprised three infantry battalions, two anti-aircraft batteries, a field battery of artillery and a battery of anti-tank guns. From 4 August Japanese aircraft raided the station in preparation for the landing. Australian soldiers at Milne Bay

Like the Kokoda Trail, the terrain of Milne Bay was difficult. A narrow, swampy coastal strip, covered in dense jungle and no wider than a few kilometres, leads up to steep mountains. the climate is hot and humid with torrential rain likely to wash out any roads being constructed.

At his GHQ in Brisbane General MacArthur, who had expected a quick victory in the Papuan Campaign, and who was never fully aware of the difficult conditions in the war zone, put continued pressure on Clowes for a greater effort. The Australian section of the Command saw many of MacArthur's demands as unreasonable. Lieut-General Sydney Rowell, who had replaced Major-General Morris as GOC at Port Moresby, was told by Major-General George Vasey, Deputy Chief of the Australian General Staff, that GHQ "was like a bloody barometer up and down every two minutes...". Part of this confusion arose from Prime Minister John Curtin's somewhat yielding attitude to MacArthur. Curtin had stood up to the British Prime Minister, Churchill, in demanding the return of Australian troops to fight in the South West Pacific Area. In dealings with MacArthur, however, Curtin was aware of Australia's dependence on the USA for war equipment it could not itself provide. He therefore tended not to support his Australian commanders against MacAurthur's many unreasonable demands. These demands were not based on personal observations as MacArthur did not visit Papua until October 1942.

Australian coastwatchers continued to be an important part of the war effort. On islands dotted around the South West Pacific Area they radioed vital information to the Allied command reporting enemy ship movements. Admiral Nimitz, Us Navy Supreme Commander, Pacific Ocean Area, later praised their work in relation to the Solomons Campaign. "The Coastwatchers saved Guadalcanal, and Guadalcanal saved the Pacific." On 24 August RAAF pilots and coastwatchers reported seven barges approaching Goodenough Island, about 100 kilometres north of Milne Bay. After the Japanese troops had disembarked, RAAF aircraft destroyed the barges, thus marooning about 350 Japanese away from the main invasion force.

This Japanese force, escorted by cruisers and destroyers, landed in the early hours of 26 August. They encountered fierce opposition from the RAAF squadrons and the land artillery. Nevertheless many were able to land with supplies and heavy equipment such as tanks. This emphasis on heavy armaments was a shock to the Australians who had thought the swampy terrain of the area made the use of tanks impossible. The Australians lacked sufficient armoured vehicles among their weapons of war. On the night of 27 August this situation forced the South Australian unit, 2/10th Australian Infantry Battalion, after defending the strategically important village of Gili Gili, to withdraw with heavy losses. With continued torrential rain, however, the Japanese tanks soon became a liability in the boggy conditions. Nevertheless, the relatively flat areas around the airstrips and the KB Mission Station saw much of the fighting.

As well as the usual artillery and mortar fire of battle, the Australians had to contend with enemy jungle snipers. In the darkness the Japanese soldiers would call out orders in English, in some cases tricking the Australians into betraying their positions.

By 31 August, Major-General Clowes' forces were steadily resisting the now tiring invaders. On the night of 31 August-1 September there was a decisive battle around one of the airstrips resulting in heavy losses to the Japanese. Australian artillery and mortar fire played a large part in turning the fortunes of battle in the Allies' favour. Australian casualties numbered 373. One hundred and sixty-one were listed as being killed or missing. United States forces serving at Milne Bay lost one killed in ground battles and several more killed or wounded in air-raids. On 3 September the Japanese started to withdraw and the first land victory in the Pacific War was won by the Allied forces, the majority of whom were Australian.