Indigenous soldiers returning home from the horrors of World War I were plunged headlong into another long-running battle.

Serving in the Australian Imperial Force (AIF) allowed them to enjoy some equality with their white comrades.

Aboriginal and Torres Strait Islander readers are advised the following story contains names and images of people who have died.

On the frontline and abroad they shared the same odds of death.

They were deemed good enough to die for their country, but under Australian law back then, not good enough to be a citizen in it.

An estimated 800 Aboriginal men served in the AIF, many with distinction.

They returned home to a horrible reality, another type of no-man's-land: the inequality of a nation deeply divided by White Australia laws.

For them, peacetime meant discrimination, segregation and marginalisation.

'Caught between two worlds'

In 1917, soldier settlement schemes began across Australia and a grateful nation rewarded thousands with land allocations.

A quarter of a million returned soldiers flooded home.

The scheme aimed to bring peacetime prosperity, give ex-servicemen employment, open up virgin country to agriculture and bolster regional Australia.

In Victoria, from 78,000 returned servicemen, 11,000 applied for soldier settlement allocations.

Of the successful applicants, only two were Indigenous: Percy Pepper, a Gunaikurnai man from Gippsland in eastern Victoria and George Winter McDonald of Gunditjmara descent, from the south-east of the state.

"He was trying to build a foundation for himself and his family because of that issue of being caught between two worlds and not being able to go back onto the mission," Mr Pepper's great-granddaughter Lena Morris said.

Percy Pepper sits on a lawn with his daughter, later in his life. ( Supplied: Pepper family )

Though both Mr Pepper and Mr McDonald had been born on Church-run missions, both were deemed in the terminology of the times to be 'half-caste': half white, half black and too fair-skinned to be classed by the government as Aboriginal and therefore allowed to reside on the missions.

Nor could they receive any government welfare.

Under the Half-Caste Act at the time, both men needed permission to travel, marry or consort with Aboriginal people.

A century after the Armistice, new evidence about the soldier settler scheme is emerging from government archives across Australia.

Nationally, there was a mere handful of successful Indigenous applicants for soldier settlement blocks.

New South Wales is believed to have had just one.

A plea for viable farmland

That handful of men had another thing in common.

The auction record for repossession of Mr Pepper's land allocation. ( Public Record Office Victoria )

They were fair-skinned enough to be considered "substantially European" in appearance.

Even so, Mr Pepper, who had farming experience, had to supply three references from white citizens as part of his application for a soldier settlement block.

History shows about half of all ex-soldiers granted settler blocks walked away within a decade of taking up their land.

Many of the blocks were not viable: too far from market, poor soil, lacking capital and infrastructure, being farmed by ex-servicemen with physical and psychological debilities.

Mr Pepper's 22 hectares at Koo Wee Rup, south-east of Melbourne, was on a floodplain.

Three times in six years, massive floods destroyed his crops.

Despite also running a bicycle shop in the nearby town in an effort to make repayments, he was sold up by the authorities.

Weeks before, he made one last desperate plea.

In a five-page letter to the new premier of Victoria, he outlined how his wife had died months earlier, leaving him with seven young children. He wanted to swap his block to a more manageable one in a warmer climate in his traditional country.

He had long played down his Aboriginality. Now he laid it bare.

"This land was my great grand father's [sic] and the white people took it," he wrote.

"I am the only half-caste Australian Aboriginal that has tried on the land.

"I always worked for my living and could do much harder work than I can do now before I went to the war."

His plea fell on deaf ears.

In one final indignity, on the day of the auction in August, 1924, his land, then under a metre of water, failed to reach its full value.

Mr Pepper wrote a letter to the premier pleading his case for more time to meet his repayments or to swap his allocated block for a more viable one. ( Public Record Office Victoria )

Mr Pepper left the house he had built and his dream of independence. He spent the rest of his life doing labouring jobs.

Mr McDonald, the only other Indigenous serviceman to be awarded land in the state, walked away from his block in south-west Victoria in 1923.

Scarred land, scarred past

In Western Australia, Kenneth Farmer, a Noongar man from the state's south-east, relinquished his settler block soon after.

Mr Farmer was one of four brothers who enlisted in World War I.

Two of them, Larry and Augustus, were killed on the Western Front.

Mr Farmer's granddaughter, Gabrielle Hansen Farmer, said the family was still angry at the injustice.

"Grandfather Farmer, you may as well say he gave the best part of his life for his country," she said.

"He went and fought for his country. He came back and they awarded him with a piece of land that he lost."

That piece of land is a 40-hectare block near Kojunup.

Kenneth Farmer's brothers, Augustus (left) and Larry (right), both served at Gallipoli and died on the Western Front. ( Supplied: Farmer family )

Today, it is seriously salt-scarred and covered with dead trees and salt bush, a reminder of the obstacles faced by Mr Farmer almost a century ago in toiling to make a new life post-war.

The Farmer clan is rightly proud of its family contribution to war, but the treatment of their forebears in peacetime still rankles.

Pauline Farmer, another of Mr Farmer's granddaughters, is keen to tell the story to a wider audience.

"I think the more involvement we get, the more to the truth we are going to come to, which is a good thing," she said.

Returning to White Australia

Four brothers of the Lovett family of western Victoria fought in World War I, but none of them were granted land, seemingly because they were Indigenous.

All four enlisted again in World War II.

Alfred Lovett and his three brothers enlisted in both World Wars, but received no land when they returned. ( Australian War Memorial )

When their traditional mission land was cut up for soldier settlement afterwards, none of the brothers were awarded a block.

For Johnny Lovett, Anzac Day is full of confronting, conflicting emotions.

"They were quite happy to go and defend this country because that put them on some equality and an even keel with White Australia," he said of his father and uncles.

"But that even keel was soon taken away when they came back from the wars and they were back to being black."

The soldier settlement scheme and its detailed documentation in thousands of official files in archives across the country tells an unpalatable story of an earlier Australia riven by racism.

On Anzac Day, we hear much about Australian values forged in war: mateship, sacrifice, a fair go for everyone.

It's often called the Anzac Spirit. Some of those virtues hold true; some clearly do not.

Watch this story on ABC TV's Landline this Sunday at 12:30pm or on iview.