Originally designed as a tug, during its construction, the ship was purchased by the Queensland Maritime Defence Force and was converted for military service.

To equip the new force the colonial government initially ordered two gunboats and a torpedo boat.

[3] As an interim measure as well as to supplement the purpose–built warships it was decided that other ships already under construction be modified for military use.

Otter was one of the ships chosen and in military service she performed tender duties and conducted patrols.

[1] During World War I, the Royal Australian Navy (RAN) requisitioned Otter from her civilian owner and used her as an examination vessel.