VH-AMM departed Sydney at 1426, tracking via Nowra to Moruya and cruising at flight level 160. Nowra control zone extends approximately 19 miles south of Nowra. The base of the control area south of this is 8000 ft, until 30 miles from Nowra. From 30 miles south of Nowra to Moruya the base of controlled airspace is flight level 150. VH-MJH departed Moruya at 1442, tracking via Nowra for Sydney and cruising at 7000 ft. Advice of this departure was passed by Melbourne flight service to Nowra air traffic control. At 1448 Melbourne air traffic control advised Melbourne flight service that VH-AMM was on descent 12 miles south of Nowra and would be calling flight service. The descent was continued and as instructed by air traffic control the crew called on the flight service frequency. An estimate of 1501 for arrival at Moruya was given to flight service. Nowra air traffic control had observed both aircraft on radar and contacted flight service to pass an instruction to VH-AMM to maintain 8000 ft. An error in the call sign used by Nowra air traffic control caused a delay in transmission of this instruction. When the message was passed to the crew of VH-AMM at 1451 they advised they were climbing back to 8000 ft from 7700 ft. The two aircraft passed at about this stage. Melbourne flight service was required to pass traffic information to both aircraft about each other, but had not done so. Nowra was not a compulsory reporting point and the Melbourne air traffic controller did not pass a position report for Nowra to flight service. Because there was no position report the controller had advised flight service when the aircraft was on descent. The flight service officer did not have the flight progress strip for VH-AMM in the active bay until after the controller's report of the aircraft being on descent. The procedures adopted left limited time for the flight service officer to assess the traffic situation. Significant Factors The following factors were considered relevant to the development of the incident: 1. Limited time period available to the flight service officer after advice of VH-AMM on descent. 2. Flight service officer did not pass the required traffic information to either aircraft, reasons undetermined.