The use and potential of online assessment in Australia's vocational education and training (VET) sector was examined. The pertinent literature was reviewed, and 41 Australian and international online designers were interviewed. The following issues in achieving quality online assessment were identified: (1) using the online environment to expand learning and assessment possibilities through self-assessment, peer assessment, and group/collaborative assessment; (2) measuring the quality of online interactions/contributions between learners and between learners and teachers; (3) creating methods to ensure that online assessments yield evidence relevant to the skills being assessed and are valid and authentic; (4) assessing learner readiness for online learning and assessment; (5) time and resource management for online assessors; (6) providing online support for online assessors; and (7) ensuring authentic learner performance by controlling cheating. The following were among the 17 key points for assessment in online learning in VET that emerged from the study: (1) plan upfront how candidates will demonstrate their competence; (2) make assessment part of the online learning process; (3) believe that simple technology can be as effective as complex technology; (4) explore the possibilities of blended delivery and assessment methods; and (5) use the online environment to review, compare, and evaluate assessors' assessment strategies. (Fourteen tables and 111 references are included in Volume 1. Volume 2 contains these appendices: Names and addresses of the project reference group; the 10 interview questions; seven fictional scenarios developed to illustrate ways to incorporate online assessment into VET courses delivered online and face to face; screens from the original website; and a list of interview respondents.) (MN)