With a second counter-thrust having been beaten back again and the loss of Sattelberg, Katagiri decided to fall back to the north, to form a defensive line around Wareo to wait for the Australians to follow up their victories with a further advance. By this time, Katagiri's forces were suffering from a manpower shortage due to a lack of reinforcements and the supply situation had still not been rectified. The Australian commander, Wootten, was keen to regain the initiative and he decided to resume the advance in the north with a view to securing the remainder of the Huon Peninsula. The first stage of Wootten's plan involved advancing north and securing a line along a ridge that ran between Gusika, on the coast, and Wareo, which was inland. It was to take place in two main drives: the 26th Brigade, having secured Sattelberg, would advance to Wareo on the left, and the 24th Brigade would advance on the right, up the coast to secure Gusika and two large water features about inland near the head of the Kalueng River, known collectively to the Australians as "the Lakes". A third, minor advance would take place in the centre to Nongora and the Christmas Hills, responsibility for which was given to the 20th Brigade.