[1] Otway was laid down by Vickers Limited of Barrow-in-Furness in England in March[citation needed] 1925, under the designation OA2.

[2] After commissioning, Otway and Oxley were temporarily assigned to the Royal Navy's 5th Submarine Flotilla.

[1] Because of the deteriorating financial conditions leading into the Great Depression, the two submarines were placed into reserve a year later;[1] Otway was paid off on 10 May 1930.

The submarines were maintained in operational condition, and left the harbour twice a month for diving exercises.

[1] The ongoing cost of maintaining the boats, coupled with the tonnage limits imposed by the London Naval Treaty prompted the Australian government to offer Otway and Oxley to the Royal Navy.