In March of 1963, McDonnell had tried to interest the Royal Australian Air Force (RAAF) in a version of the F-4C (Model 98DX) powered by a pair of French-built SNECMA Atar 9 turbojets. This engine was picked because it powered the Dassault Mirage IIIO fighters that were already being flown by the RAAF. However, the RAAF opted instead for the General Dynamics F-111C.
The development of the F-111 variable-geometry strike fighter turned out to be much more difficult than expected, and the program suffered from numerous problems which required lots of expensive fixes that produced seemingly endless delays. In particular, the serious problems with USAF F-111As resulted in a long-term postponement in the deliveries of the F-111Cs to Australia. In May of 1970, it was announced that deliveries of F-111Cs to the RAAF could not be expected until 1974.
The long delays in the delivery of the F-111C to Australia left the RAAF with no replacement for its fleet of aging Canberra B.20 bombers. In order to fill in the void until the F-111Cs could be delivered to Australia, the USAF agreed to loan 24 factory-fresh F-4Es to the RAAF. The program was named Peace Reef, and the contract was signed on June 22, 1970.
The 24 F-4Es were delivered to Australia in September and October of 1970. They served with Nos. 1 and 6 Squadrons at Amberley, Ipswich, replacing the Canberra bombers which had previously been flying with these squadrons. The RAAF F-4Es were assigned the out-of-sequence serial prefix A69 (previously assigned for the first ten planes of a cancelled order for Curtiss A-25 Shrikes during the Second World War), chosen so that it matched the FY of the USAF serial numbers. However, the original USAF serials remained painted on the aircraft.
The RAAF crews liked their F-4Es, so much so in fact that Australia at one time seriously considered cancelling its order for the F-111Cs and buying Phantoms instead. This turned out not to be cost effective, since Australia would also have had to purchase a fleet of KC-135 tanker planes to support its Phantoms. When the F-111Cs finally became available, the RAAF crews reluctantly gave up their mounts. In anticipation of the delivery of the F-111Cs, six RAAF F-4Es were returned to the USA in October of 1972. The long-awaited F-111Cs finally began to arrive in Australia in June of 1973, and the 23 surviving Phantoms were returned to the USAF in two batches during October 1082 and June 1973. The last of the RAAF F-4Es had been returned to the USA by June 21, 1973.
During RAAF service, F-4E 69-7203 was lost on June 16, 1971 in an accident during night bombing practice. Of the 23 surviving RAAF F-4Es returned to the USAF, 21 were later converted to F-4G Wild Weasel SAM suppression aircraft, mostly for the 35th TFW.
69-0304/0307 McDonnell F-4E-43-MC Phantom all loaned to Australia (1970/73) 69-7201/7260 McDonnell F-4E-43-MC Phantom 7201/7217 loaned to Australia (1970-73) 7203 w/o June 16, 1971. 7219/7220 loaned to Australia (1970-73) 7234 loaned to Australia (1970-73)