It was February 1978 when the sleepy New South Wales town of Bowral was occupied by the Australian military, armed soldiers descending onto the streets to protect some of the world's most important people.

The Southern Highlands town was not under attack, but a day earlier the Hilton Hotel in Sydney was.

Sydney's Hilton was hosting the CHOGRM meting when a bomb exploded on February 13, 1978. ( Supplied )

The inner city hotel was the scene of a bomb targeting the first Commonwealth Heads of Government Regional Meeting (CHOGRM) and the dignitaries had to be moved to safety.

Last week marked the 40th anniversary of the bombing and the time the unlikely town of Bowral was deemed under occupation by 800 military personnel.

The heads of state were always going to visit Bowral for a social outing, but with the terrorist attack the decision was made to move them earlier, along with a cavalry of the Australian Army.

"I was living there at the time and at 5:00am I was making coffee, looking out and on the main road there's truck after truck passing-by of military personnel," former resident Rowen Cahill said.

"I hopped in my car and went down town and found the Army had moved into town and was now staking it out, Belfast-Northern Ireland-style.

"There was no announcement, but the afternoon before military helicopters had been in and out."

Military helicopters used Bowral's golf course to shuttle the leadership in and out of the town. ( Supplied: The Post )

Mr Cahill rang ABC radio to tell them his town was now occupied by the military.

The journalist on the other end of the phone did not believe him.

Ten minutes later, and after they had verified the information, the broadcaster called Mr Cahill back to ask if he would provide a live cross on-air.

Now an honorary fellow at the University of Wollongong's Faculty of Law, Humanities and Arts, Mr Cahill has co-authored a paper about the events in Bowral in 1978.

Mayor told only after leaders arrived

Former Bowral mayor David Wood was ready to officially welcome members of CHOGRM to Bowral, only to discover they had already arrived by helicopter.

"I rang Berida Manor [where the dignitaries would be based] and Malcolm Fraser invited us to go and have the evening dinner with them to get over the problem of me not being able to welcome them," he said.

"I was surprised but not worried. They were guarding the number-one people of Commonwealth countries so I wasn't worried at all."

CHOGRM leaders pose for a photo at Berida Manor in 1978. ( Supplied: Southern Highland News )

Part of the military presence included an encampment on a football field, while helicopters used the golf course for take-off and landing.

Mr Cahill said the military presence might not have even been legal.

"It was a dodgy event to begin with because it didn't have any clear constitutional legal authorisation, and perhaps even the troops — if they engaged in a firing incident — they would've been liable under civilian law," he said.

"They were there for three days with no public explanation and the soldiers wandered around as if they didn't know what they were doing."

In Australia during times of peace, Mr Cahill said the agreement was that civil authorities — like the police — would deal with social order.

He believes that the military presence in Bowral was a contravention of that principle.

Mayor's phone tapped, friend later assassinated

It was an especially unusual time for Mayor David Wood who was regularly called upon during the three days by the media to provide commentary about what was happening in the town.

Little did he know that his phone had been tapped by the military for the duration of their visit.

"At the end of the whole proceedings, the army chief rang me and told me they were impressed with how I'd handled the media," he said.

"I was very surprised (he knew that), I can tell you. We had a lot of calls.

"We've always been a tourist destination but most of them don't come in uniform."

Mr Wood also formed a brief friendship with the then-prime minister of Bangladesh, a squash opponent.

"I would've liked to have kept in touch with him after our game of squash, but about six months later he was assassinated," Mr Wood said.