However, this led to situations where Australian vessels were mistaken for British ships, and when Australia became involved in the Vietnam War, the RAN was effectively fighting under the flag of another, uninvolved nation.

[2] During the early 1900s, several British dominions, including Australia, began to campaign for the right to create naval forces independent of the Royal Navy, and capable of deploying outside territorial waters.

[1] During the 1909 Imperial Conference, Canada and Australia campaigned for this, and suggested that these ships fly the British White Ensign, defaced with an emblem representing the dominion.

[4] Royal Assent was granted to the new flag by Queen Elizabeth II on 7 November 1966, and its creation was formally announced by Prime Minister Holt on 23 December 1966.

[1][11] However, the frigate HMAS Stuart was the first to use the ensign, when the ship's company unofficially flew the flag on 25 December 1966 as part of shipboard Christmas Day celebrations while deployed to the Far East Strategic Reserve.

[citation needed] Although the flag is normally reserved for use by commissioned warships of the RAN, special dispensation has been granted to the museum vessels HMAS Vampire and HMAS Onslow,[13] The sail training ship Young Endeavour[14] as a non-commissioned ship in Naval service wears the AWE.