Grain cropping has expanded rapidly in SE Australia during the past decade and recently was estimated to cover 350,000 ha, with over 2 million ha of suitable land comprising mostly the dominant Basalt Plains soil type. Crops grown using raised bed tillage occupy over 89,000 ha of this area and represent a substantial change in land use from the traditional wool enterprises based on perennial pasture. In the high rainfall zone (>550 mm/year) in south west Victoria), broad-acre raised beds are being rapidly adopted by growers for grain production, with over 30,000 ha of raised beds under crops in 2003. Raised beds are thought to reduce risks associated with grain cropping due to the reduction in waterlogging. These changes have potential to alter the water balance, which may exacerbate or alleviate dryland salinity and lead to off-site environmental impacts due to intensive fertility management. Changes in the water balance and controlled traffic may also lead to changes in soil properties with potential yield benefits. Beds growing canola in a wetter than average season were found to effectively shed water as runoff from the furrow areas at the expense of increased infiltration during storm events compared to highly variable infiltration under conventional tillage. During storms, the raised bed plots released more runoff than the conventionally-cropped and pasture plots. However, there were negligible differences in runoff volumes during lower intensity rainfall events over the winter that is more typical of winter rainfall patterns in southern Australia. Total phosphorus and total nitrogen concentrations for all runoff events were well above levels recommended as satisfactory for Victoria's inland waters and phosphorus in runoff waters was predominantly in a dissolved form. Penetrometer resistance surveys found lower significantly lower soil strength for the same moisture content in the raised beds compared to conventional tillage through the top 20 cm. Other small changes associated with porosity and structural stability were also identified. Raised bed tillage was found to be beneficial to grain cropping under conditions of poor external (flat) and internal (low permeability B-horizon) drainage through provision of shortened pathways for drainage of the A horizon. The reduced incidence of saturated conditions in the A horizon appears to have lead to preservation of friability (low soil strength) as the soil dries, however no increase in yield was found in dry seasons. Whilst the amount of runoff from low intensity rainfall appears not to be increased through installation of raised beds, storms result in more runoff from raised bed systems compared to conventional cultivation.