Both aircraft were tracking towards radio navigation aids at Biboohra from approximately opposite directions, and were the only aircraft using those tracks. VH-PCO's climb had initially been restricted to 4500 feet, to maintain separation with VH-TAK on descent. The controller responsible for separating the two aircraft became preoccupied with other traffic, and, overlooking the separation requirement, cleared VH-PCO to climb to 8000 feet and VH-TAK to descend to 6000 feet. VH-PCO had reached 8000 feet, VH-TAK had reached 7000 feet, and the two aircraft had passed before the mistake was realised. A breakdown in vertical separation standards had occurred in the vicinity of the radio navigation aids. However, the proximity of the two aircraft to one another at the time of passing was not established. The Cairns controller responsible for separating the two aircraft was performing an established traffic management function, which combines the dual responsibilities of Aerodrome and Approach control utilising a single radio communication frequency. This controller's workload at the time of the incident was subsequently assessed as being moderately high. Following this incident, emphasis was made on the requirement for air traffic control staff to process traffic within the limitations of the present air traffic control system, and in accordance with published standards and procedures. Additional traffic management procedures have also been instituted at Cairns, providing increased regulation of departing and arriving traffic. Other arrangements at Cairns are also being reviewed with the intention of making changes if appropriate. Matters under review include: the general management of airspace in the Cairns area; control tower management and staffing; and the adequacy of existing facilities.