It reformed in August, again as a Fleet Requirements Unit, at HMS Grebe, moving immediately to RN Air Section Takali, Malta.

The squadron was equipped with Boulton Paul Defiant TT.1, an interceptor aircraft converted for target tug operations and Fairey Swordfish I, a biplane torpedo bomber.

[6] Whilst at Gibraltar it operated detachments at RN Air Section Tafaraoui, (lodger facilities at RAF Tafaraoui) in Algeria, from 11 May 1943 to 15 June 1943, with Fairey Swordfish aircraft,[7] and also at RAF Oujda, in Morocco, with Boulton Paul Defiant to provide target towing for an American Anti-Aircraft battery firing range.

[5] before moving to RNAS Dekheila (HMS Grebe), Alexandria in Egypt, on 15 June 1943,[6] where it later disbanded, being absorbed by 775 Naval Air Squadron on 4 July 1943.

In 1949 de Havilland Mosquito TT Mk.39, a RN target towing variant, replaced the Miles Martinet target tug aircraft, later marks of Supermarine Seafire were used for fighter exercises, and Beech Expeditor, an American trainer, transport and utility aircraft, operated passenger and cargo flights.