Saltmarsh is an important coastal habitat located in the littoral zone of estuaries. Australian saltmarsh area is decreasing due to agricultural and urban development and invasion by mangrove. The aim of the study was to assess the contribution made by saltmarsh as a habitat and a source of food items for fish. Three saltmarsh sites were studied, with Towra Point chosen as a site for detailed ecological study. When corrected for water volume, fish densities were found to be higher within the saltmarsh compared to the adjacent mangrove. Although the fish assemblages in saltmarshes differed significantly from mangroves the overall ratio between commercially and ecologically valuable species in these habitats are similar, a result suggesting the importance of temperate saltmarsh as habitat for economically important fish. Significant export of crab larva from saltmarsh (average crab larval abundance 2124.63 m-3 outgoing water) is a positive contribution to the estuarine food chain supplementing the nutritional requirements of estuarine fish. While the diet of the crabs producing this larvae seems dependant on the saltmarsh environment (given the contrasting isotopic signatures of Sesarma erythrodactyla in saltmarsh and mangrove, and the similarity of isotopic signatures in the saltmarsh for Sesarma erythrodactyla and Helograpsus haswellianus), the crabs do not seem to be dependent on any of the common species of saltmarsh plant, but rather depend on particulate organic matter (POM) derived from local and other sources. Crab larva are a prey item for many estuarine fish, including commercially important species, as evidenced by gut content analysis of fish visiting the saltmarsh flats during spring tides. The results strongly suggest that emphasis be given to ecosystembased management for an estuary rather than component (e.g., vegetation) based managed as defined by the Fisheries Management Act (1994) and the State Environmental Planning Policy 14.