In the mid 1880’s efforts to join the separate Australasian colonies into an Australian Commonwealth Federation increased. The earlier NSW / Australian Ensign was slightly modified and revived for use on land and in printed materials to promote federation, particularly in NSW and Queensland. It was used by such groups as the Australian Natives Association and the Australian Federation League. The League’s slogan was ‘One people – one destiny – one flag’.
In the absence of an official Australian flag in January 1901, this Federation Flag was widely used. When Prime Minister Edmund Barton submitted the winning design in the Federal flag competition to the British authorities in 1902, he also included the Federation Flag as Design B – an alternative for adoption as the new Australian national flag. It was rejected without any consideration as it did not conform to the style of official British flags. Usage as an unofficial Australian flag continued until Word War I.
Note: Compared to the NSW / Australian Ensign 1831/32, the Federation Flag was subject to some variation depending on the manufacturer. Sometimes the cross was dark blue and sometimes light blue, and often the stars had five points instead of eight and occasionally they were differently positioned on the arms of the cross.
Further reading about the Federation Flag at Flags of the World.