Dissatisfied with the fiction published by established literary quarterlies, Sydney-based writers Michael Wilding, Frank Moorhouse and Carmel Kelly devised an innovative strategy to publish 'new writing'. Many of the stories favoured by this group contained strong sexual themes and, in the past, had found publication in 'girlie' magazines such as Squire, Casual, Chance and Man. But opportunities for publication became limited as these magazines closed, the latter ceasing operation in 1974.
Tabloid Story first appeared on 20 October 1972 as a sixteen page supplement to National U, the Australian Union of Students newspaper. In subsequent issues Tabloid Story appeared in a variety of host publications, including Honi Soit, Lot's Wife, Nation Review, and the Bulletin. This method of publication secured a circulation unmatched by the established literary quarterlies. Michael Wilding estimated that 50,000 - 60,000 copies of the first two issues were circulated, a figure far exceeding the 1,000-3,000 circulation of the literary quarterlies. Tabloid Story achieved international exposure when included in the Qantas magazine, Q. V., reaching 150,000 passengers across the world. It was also included in the Brooklyn-based magazine Assembling.
Tabloid Story was a restrictive publication, accepting fiction that diverged from the traditional Australian tales of bush life and defied the strictures of the well-rounded story favoured by other magazines. Inspiration was often drawn, not from writers in the Australian tradition, but international writers such as Borges, Cotazar, Casares, Calvino and Barthelme. While not compulsively sexual, the sexual themes in some stories published in Tabloid Story were affected by censorship and one issue, containing Moorhouse's 'The Oracular Stories', was seized by Brisbane vice squad.
Attempting to improve the payment offered to writers of fiction, the editors of Tabloid Story used a grant from the Commonwealth Literary Fund to pay contributors the minimum rate recommended by the Australian Society of Authors. Furthermore, they took the unprecedented step of declaring the minimum rate on their pages, exerting pressure on other publications to follow a similar policy. Many writers found a place in Tabloid Story for their sometimes eccentric take on short fiction. In addition to the editors, stories were contributed by several other significant Australian authors, including Murray Bail, Morris Lurie, Peter Carey, Elizabeth Jolley, Alan Marshall, Jack Hibberd, Helen Garner and Dal Stivens (qq.v.).
Editorial responsibility shifted to Melbourne in 1976 after the twentieth issue. Tabloid Story continued for another four years, appearing in host publications such as the Melbourne Times, Nation Review and the National Times.