Government environment protection policies for waterways have traditionally relied on water quality indicators and their objectives. In this paper we describe the development of biological objectives based on invertebrate indicators for inclusion in a government policy for the catchment of Western Port Bay, Victoria. The first step of defining segments (areas with streams in which the same objectives are applied) was problematic, requiring two different approaches, as follows. Site groups initially based on invertebrate community composition derived using multivariate techniques (ordination and classification) proved to be unsuitable for policy segments. Segment boundaries were subsequently defined using topographical (e.g. boundary of foothills and lowland plains), climate (e.g. rainfall) and land-use (e.g. urban) features. We used information and data from reference sites inside as well outside the catchment to derive specific biological objectives based on aquatic invertebrates for these segments. Objectives were specified for the following four indicators--number of invertebrate families, the SIGNAL index, the AUSRIVAS predictive model and the number of key families.