In 1938, the Australian Commonwealth Naval Board (ACNB) identified the need for a general purpose 'local defence vessel' capable of both anti-submarine and mine-warfare duties, while easy to construct and operate.

[6] The need for locally built 'all-rounder' vessels at the start of World War II saw the "Australian Minesweepers" (designated as such to hide their anti-submarine capability, but popularly referred to as "corvettes") approved in September 1939, with 60 constructed during the course of the war: 36 (including Kiama) ordered by the RAN, 20 ordered by the British Admiralty but manned and commissioned as RAN vessels, and 4 for the Royal Indian Navy.

[1] The coastal community of Kiama, after which the vessel was named, donated recreational materiel for her crew including a radio set, books, and a 16 mm movie projector.

[1] From her arrival until September 1944, the corvette's main duty was to escort convoys along the New Guinea coastline, although a reassignment for the duration of June saw Kiama perform anti-submarine patrols in the Solomon Sea.

[1] On 25 December, the crew was recalled from leave to go to the assistance of the liberty ship SS Robert J. Walker, which had been torpedoed by German submarine U-862.

[13] Kiama was assigned to anti-submarine patrols near Sydney for the final days of the year, before sailing to Adelaide for a month-long refit on 3 January 1945.

[1] Post-refit, Kiama was assigned to Fremantle for two months of anti-submarine warfare exercises with the United States Navy, before returning to New Guinea on 7 May 1945.

[1] In July, Kiama transported Prince Henry, Duke of Gloucester from New Guinea to the Solomon Islands, then spent the rest of the month moving troops and military cargo between these two locations.

[21] In 1966, Kiama was re-commissioned under command of Lieutenant-Commander E Burrows in the 27th Fisheries Protection Squadron to join her sister ship HMNZS Inverell.