Remarks: These are the larvae of a sawfly, a wasp-like insect.
The larvae group together during the day for protection. If disturbed, the group rears up in unison and exude a yellowish liquid.
During the night the group separates and the larvae climb into the branches and eat leaves. They usually eat, and therefore can be found in, Eucalyptus trees.
The name sawfly originates from the adult females behaviour of using her serrated ovipositor to cut a slit in a tree in which she lays her eggs.
References: Backyard Insects. Paul Horne & Denis Crawford. 2006
Identification courtesy of David Knowles.
If you can help us fill in any other details please contact us.