From 1824 there were acts and regulations to limit squatting. The limits of location, also known as the Nineteen Counties, were defined from 1826; beyond these limits land could not be taken up although squatters were farming there. From 1833 Commissioners of Crown Lands were appointed under the Encroachment Act to manage squatting. From 1836 legislation was passed to legalise squatting with grazing rights available for ten pounds per year. The 1847 Orders in Council divided land into settled, intermediate and unsettled areas, with pastoral leases of one, eight and 14 years for each category respectively. In Victoria, the 1860 Land Act allowed free selection of Crown land including that occupied by pastoral leases. Equivalent New South Wales legislation, the Crown Lands Allienation Act and Crown Lands Occupation Act was passed the following year. These acts ended the squatting era, but did not succeed in their intent to move Australia from a pastoral to agrarian economy.[1]

It is known that many squatters fought battles with advanced European weapons against the local Indigenous Australian communities in the areas they occupied, though such battles were rarely investigated and modern historians dispute the number of Indigenous people killed in these skirmishes. Squatters were only occasionally prosecuted for killing indigenous people. The first trial of white men accused of murdering Indigenous people was the trial following the Myall Creek massacre, in 1838, fifty years after the arrival of British colonists.

Whilst life was initially tough for the squatters, with their huge landholdings many of them became very wealthy and were often described as the "squattocracy". The descendants of these squatters often still own significant tracts of land in rural Australia, though most of the larger holdings have been broken up, or, in more isolated areas, have been sold to corporate interests.

Their iron grip on Australia's agricultural land was challenged in the 1860s with the passing of Selection Acts that allowed ex-miners from the 1850s gold rush to claim areas of farmland at no cost. Whilst squatters tried tactics legal and illegal to discourage "the selectors", (for instance, taking out selections of their own which covered vital land such as watercourses), eventually closer settlement took place and smaller farms (though still huge by European and even US standards) became the norm in the more fertile parts of Australia.

The power of the squatters, including their affinity with the police, is alluded to in "Waltzing Matilda", Australia's archetypal folksong.

Of late, the term's meaning in Australia has come to be the same as that of the British usage.