In 1902, a motion, introduced into Parliament by Mr. (now Sir) Thomas Watt, K.C.M.G., member for Newcastle, in favour of universal compulsory service, was carried unanimously. A bill was next drafted and formally introduced by the Prime Minister, Sir Albert Hime, K.C.M.G., but was withdrawn. This was followed by the appointment of a Commission in November, 1902, under the chairmanship of Mr. Ernest L. Acutt, C.M.G., "to consider and report upon the general measures proper to be taken for the defence of the Colony and to advise as to the most suitable mode of constituting a defence force according to the general object of the bill (No. 36), which was introduced into Parliament at its last ordinary session."

This Commission reported in favour of compulsory military service, drafted another bill and recommended the enactment thereof. The recommendations were supported by the then Commandant of Volunteers (Colonel Leader, whose services had been specially lent to Natal by the Imperial Government). This officer was appointed to take command of the troops during the period of their transition from a volunteer to a militia force, or otherwise to institute such other radical changes as might appear imperative.

The bill was passed into law with but little opposition towards the end of 1903.[50] The labour of initiating, drafting and supporting in Parliament this statesmanlike measure was undertaken chiefly by Sir Thomas Watt.

Among its principal features were the following:

"That the Militia, with the Governor as Commander-in-Chief, and a Commandant of Militia, with the rank of Colonel, as responsible for the administration of all Militia and Defence matters, should consist of all the male inhabitants of European descent in the Colony, from the age of 18 to the age of 50 years inclusively ... not being aliens." Certain exemptions were allowed.

The Force was divided into four classes:

"(a) Active Militia, consisting of all men who may volunteer and who may be accepted for service in this class, and all other men who may be balloted for service.

"(b) Militia First Reserve, consisting of all unmarried men from 18 to 30 years of age inclusive, who are not in the Active Militia.

"(c) Militia Second Reserve, consisting of all married men between 18 and 30 years of age inclusive, and all men from 31 to 40 years of age inclusive, who are not in the Active Militia.