Measuring basin wide changes in the groundwater volumes can be accomplished with remote sensing using satellite gravimetry as provided by the GRACE mission. Direct ‘inversion’ of GRACE gravity data can be used for target areas smaller than can be considered by the global method based on spherical harmonics. This study used a 4 year span of GRACE data to detect variations in the gravity signature in the order of 10 mm equivalent thickness of surface water in a target area 2 degrees square over the Lower Murray Darling Basin. The gravity inversion is naturally poorly conditioned so improvements to calculation of the kernel were developed to minimise this limitation, involving both correction of the flat earth model used for small areas and compensation for the rest of the Earth’s surface. The extensive monitoring of the groundwater of the Lower Murray Darling Basin provides a quality of ground truth available in few other locations in the world. Comparing the gravity signal with the estimated changes in the groundwater shows that GRACE date is a potentially useful method of monitoring moderately sized groundwater basins.