The initial stage of continental extension between Australia and Antarctica was associated with lateral changes in extension direction along the margin that reflects the three-dimensional nature of strain during continental rifting. In the Cretaceous Otway Basin, this change in extension direction was related to substantial theological differences in the lithosphere across the boundary between two Paleozoic fold belts, the Lachlan and Delamerian, with the net extension direction at a high angle to this boundary. The initial Early Cretaceous rifting preserved within the onshore Otway Basin has two main structural subdomains in the eastern and western Otway Basins distinguished by different structural trends of Early Cretaceous normal faulting. This is not controlled by a variation in preexisting structural weaknesses within the underlying Paleozoic basement because the same geometry of extensional structures also occurs within the basement to the north irrespective of the preexisting structural grain. The eastern Otway Basin is dominated by NE-striking NW-dipping normal faults. In the western Otway Basin, the faults define arrays of predominantly NE-dipping or SW-dipping faults separated by wide accommodation zones defined by folding and variably striking and dipping faults. The partitioning of strain along the boundary between the eastern and western Otway Basins is accommodated by a progressive change in strike of faults and not via a transfer fault. Younger rifting in the Late Cretaceous had a similar extension direction in the western Otway basin, but had a dominant seaward dip, extension appears to have been hindered in the eastern Otway basin by a Proterozoic/Paleozoic basement feature. These factors produced a region of diverging extension along the lithospheric boundary between the Delamerian and Lachlan Fold Belts that led to failure along this boundary and the formation of a localized sinistral trans-tensional graben, the Shipwreck trough, in the early Late Cretaceous. As a result, the younger rifting stepped south of the eastern Otway Basin leaving Bass Strait (the strait between the Australian mainland and Tasmania) a failed rift. The formation of oceanic crust in the Mid to Late Eocene followed the boundary of Late Cretaceous rifting, which led to the formation of the Tasman Fracture Zone. (C) 2002 Elsevier Science B.V. All rights reserved.