The 54th Battalion was originally raised on 16 February 1916 during a reorganisation and expansion of the First Australian Imperial Force (AIF) that took place in Egypt following the Gallipoli campaign.

[5] After concentrating at Tel-el-Kebir, the battalion undertook a period of intense training culminating in a desert march to Moascar, before undertaking defensive duties along the Suez Canal.

[4] As winter arrived on the Western Front, the battalion rested behind the lines before occupying trenches along the Messines Ridge, holding a position around Wytschaete, against artillery attacks and occasional raids.

[4] In early 1918, the capitulation of Tsarist Russia allowed the Germans to concentrate their strength on the Western Front, and they subsequently launched a major offensive.

[10] Thrown into the line to stem the tide, the 54th mounted a strong defensive action around Villers-Bretonneux,[5] during which its entire headquarters, including the battalion's commanding officer, Lieutenant Colonel David McConaghy, were killed.

For their actions during the fighting in Anvil Wood, around Peronne, in early September, two members of the 54th Battalion – Alexander Buckley and Arthur Hall – received the Victoria Cross.

[11] The medieval walled town, surrounded by an unfordable river, was heavily defended by machine-gun nests, and during the assault the battalion, under the command of Lieutenant Colonel Norman Marshall, advanced through marshy ground over foot-bridges under fire while breaking into the position.

[10] During late September and early October the battalion took part in the Battle of St. Quentin Canal, attacking at Bellicourt, which proved to be their final action of the war before they were withdrawn from the line.

[15] Upon formation, the Citizen Forces battalions were maintained through a mixture of voluntary and compulsory service; however, in 1929, the Universal Training Scheme was abolished by the Scullin Labor government.

[22] The invasion never came and, on 9 January 1944, the battalion was disbanded,[15] as part of a partial demobilisation of the Australian military that took place at that time as manpower was redirected back towards industry.