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The impact of deferred grazing (no defoliation of pastures for a period generally from spring to autumn) and fertilizer application on plant population density, ground cover and soil moisture in a hill pasture (annual grass dominated, with Australian native grasses being the major perennial species) were studied in a large-scale field experiment from 2002 to 2006 in southern Australia. Three deferred grazing strategies were used: short-term deferred grazing (no defoliation between October and January each year), long-term deferred grazing (no defoliation from October to the autumn break, that is the first significant rainfall event of the winter growing season) and optimized deferred grazing (withholding time from grazing depends on morphological development of the plants). These treatments were applied with two fertilizer levels (nil fertilizer and 50 kg P ha?1 plus lime) and two additional treatments [continuous grazing (control) and no grazing for year 1]. Deferred grazing increased (P < 0·05) perennial grass tiller density compared with the control. On average, the tiller density of the three deferred grazing treatments was 27–88% higher than the control. There was a negative (P < 0·01) relationship between perennial and annual grass tiller density. Fertilizer application increased (P < 0·05) legume plant density. The densities of annual grasses, legumes, onion grass (Romulea rosea) and broadleaf weeds varied between years, but perennial grass density and moss cover did not. The ground cover of the deferred grazing treatments in autumn was on average 27% higher than the control. Soil moisture differed between treatments at 15–30 cm depth, but not at 0–15 depth over autumn and winter. The results imply that deferred grazing can be an effective tool for rejuvenating degraded native pastures through increases in native grass tiller density and population and through improving farm productivity and sustainability.