VH-OXB departed Port Macquarie for Williamtown at 0922 hours and contacted Flight Service (FS) on Area frequency on climb to 8,000 ft. VH-BIH departed Port Macquarie for Aero Pelican at 0923 hours and was climbing to 6,000 ft. The pilot initially reported on climb to 4,000 ft but this was later clarified. Each aircraft was given traffic information on the other by FS. As VH-OXB approached Taree the crew requested from FS an airways clearance to enter Williamtown controlled airspace (CTA) and were advised that they could expect a clearance at 4,000 ft. They consequently elected to descend outside controlled airspace (OCTA) to 4,000 ft and requested traffic information. The flight service officer (FSO) advised that there was no additional instrument flight rules (IFR) traffic. As VH-OXB passed Taree the crew were instructed to contact Williamtown air traffic control (ATC) for an airways clearance, which they did. Williamtown ATC were unable to issue a clearance immediately due to traffic problems in CTA and instructed VH-OXB to remain OCTA to await clearance. The crew initiated a turn at the CTA boundary (10 NM south of Taree) and commenced a holding pattern that took the aircraft northbound towards Taree. No radio transmission was made to indicate this change of track. During the northbound leg of the holding pattern, Williamtown ATC advised the crew of VH-OXB that a clearance could now be expected at 5,000 ft and the crew commenced climb to that altitude in preparation for the clearance. No radio transmission was made on Area frequency to indicate this change of level. VH-BIH also requested an airways clearance from Williamtown ATC via Sydney FS and was also told to expect a clearance at 4,000 ft. The pilot then announced his descent to 4,000 ft and clarified his current 6,000 ft altitude with FS. The FSO advised the pilot that there was no IFR traffic, he believed that the traffic advice given earlier would still be considered current by the pilots of both VH-OXB and VH-BIH. VH-BIH was now overhead Taree and changed frequency to contact Williamtown ATC and request his airways clearance. As he did so the pilot saw VH-OXB immediately ahead and at the same level. He took evasive action by increasing the rate of descent of his aircraft and passed underneath VH-OXB. VH-BIH was equipped with a single radio only and the pilot was unable to monitor the Williamtown ATC frequency prior to Taree. The aircraft passed within approximately 100-150 ft. Significant Factors 1.The Sydney FSO assumed that both pilots would consider that traffic information passed to them on departure Port Macquarie would remain current for the duration of their flight. 2.Williamtown ATC elected to use different altitudes in accordance with the original planned levels, rather than the actual levels at the time. 3.The pilot of VH-BIH had only one radio. 4.The crew of VH-OXB did not make an Area frequency transmission advising either their change of track or change of altitude. Safety Action As a result of this investigation the RAAF initiated a variation in their instruction of traffic management techniques for controllers operating the Williamtown low level airspace.