By early 1943, Japanese forces still held most of New Guinea, including the main coastal settlements of Lae and Salamaua. Australians defeated a Japanese force at Wau in late January and early February 1943. By May 1943, the Allies had captured Japanese positions near Salamaua and on 11 September 1943 they captured Salamaua. Also in September, a joint Australian and American air, land and sea operation with the 7th and 9th Australian Divisions recaptured Lae. The 7th Division was then ordered into the Markham-Ramu Valley to pursue Japanese forces across the Finisterre Range where the fighting for Shaggy Ridge continued on into 1944.
The 9th Division, the 'Rats of Tobruk', were ordered to take the Huon Peninsula and by the end of October had secured the Japanese strongholds at Finschafen and Sattelberg. By January 1944 they had captured Sio and by April the Australians had entered Madang.
While the Australians were engaged in the Markham-Ramu Valleys and the Huon Peninsula campaigns, American forces were in an 'island hopping' campaign on Eastern New Britain through Dutch New Guinea and the Netherlands East Indies. Both the Royal Australian Air Force and the Royal Australian Navy were involved in General Douglas MacArthur's advance towards the Philippines in 1944, one of the most successful campaigns of the Pacific war.
When Tom 'Diver' Derrick appeared on the front cover of the Australian Women's Weekly in May 1944, he became a national hero. His Victoria Cross, the fourth to be awarded during the Pacific War, was awarded at Sattelberg in New Guinea.
Sergeant Thomas Derrick's battalion, the 2/48th, was attacking Japanese positions on the heights of Sattelberg, near Finschhafen on 24 November 1943. The Japanese had dug in and were vigorously defending their position when Derrick's platoon was ordered to withdraw for the night. Derrick refused to give in and, instead, set off alone up the cliff face towards the Japanese positions with a haversack of grenades. Despite their gunfire, he was able to hurl grenades into eight Japanese positions and reach the summit of the hill. Next morning, when the Australians advanced, they discovered the Japanese had gone.
Thomas Derrick VC DCM was killed in Borneo just eighteen months later. He had been with his battalion, the 2/48th, in North Africa, where he was awarded his Distinguished Conduct Medal (DCM), in New Guinea where he won his Victoria Cross (VC) and in Borneo. Tom Derrick was buried at the 110th Casualty Clearing Station at Tarakan in Borneo in May 1945. His grave is now in the Labuan War Cemetery in Malaysia.