Wednesday morning saw a change in tactics for the 1st Airborne Division. So much of their infantry strength had been lost during the previous days that it was now quite clear that they had no hope of being able to fight their way through to Arnhem. Lieutenant-Colonel Frost's men at the Bridge, therefore, would have to defend it by themselves until XXX Corps arrived and relieved them.
If British resistance at the Bridge collapsed, Major-General Urquhart believed that Market Garden would still succeed providing that the remnants of his Division could hold a bridgehead on the northern bank of the Rhine. When XXX Corps arrived, they would secure the opposite bank and construct a Bailey Bridge - a temporary bridging structure, capable of supporting the immense weight of a tank - into the perimeter, allowing armour and infantry reinforcements to pour across the River.
Urquhart ordered the Division to concentrate in the Oosterbeek area and form a defensive pocket that stretched down to the riverbank. This, however, was easier said than done because the troops were scattered over several miles and were being pressed hard by a determined enemy. The 1st Border, the Division's only intact Battalion, was already in place in the woods to west of Oosterbeek, and their long defensive line defined the western edge of the Perimeter. The eastern sector, however, was completely empty on Tuesday, except for the gunners of the Light Regiment and a scattering of Glider Pilots around Oosterbeek Church, and the medical staff based on the Schoonoord Hotel on the Utrechtseweg-Stationsweg crossroads. This undefended Main Dressing Station was occupied by the Germans on Wednesday morning and many of its medical staff were taken prisoner, a loss that the Division would deeply regret in the coming days. Fortunately the Germans who overran the MDS were fearful of British anti-tank weaponry that may be lying in wait, and without pressing their advantage further, they quietly withdrew.
Throughout the remainder of Wednesday, the Oosterbeek Perimeter began to take shape as the Division's units slowly came together. To the east, in an isolated position in Oosterbeek itself, were the remnants of the 1st, 3rd, 11th Parachute Battalions and the 2nd South Staffords, collectively amounting to an under-strength battalion. This leaderless group had been in a disorganised retreat from Arnhem until Lieutenant-Colonel "Sheriff" Thompson halted them in the village and instructed Major Cain of the 2nd South Staffords to begin forming a defence. Thompson returned to his Headquarters and arranged for food and ammunition to be sent forward, and with it came a new overall commander, Major Lonsdale. On Wednesday, a series of attacks was launched against the "Lonsdale Force" by the Germans of Kampfgruppe Spindler who had followed up their retreat from Arnhem. The fighting was desperate as the battered airborne men fought at close-quarters with the German infantry and tanks. It was during this fighting that the wounded Lance-Sergeant Baskeyfield was killed whilst valiantly manning his anti-tank gun, single-handedly thwarting an enemy armour attack. He was posthumously awarded the Victoria Cross.
Despite the ferocity of these attacks, the Lonsdale Force remained firm and stood its ground, and in so doing had prevented the Germans from driving into the otherwise unprotected eastern sector of the Perimeter and cutting off the Division from the River. Its men were so weakened by this onslaught, however, that they were obliged to withdraw closer to the Perimeter to take up positions around the Church on the outskirts of Oosterbeek, directly behind which lay the Division's artillery in the form of Sheriff Thompson's Light Regiment. The troops who arrived at these new positions were in a sorry state, but fortunately the Germans did not pursue them, and so the Lonsdale Force was granted its first moment of rest in over three days.
In the west, the 4th Parachute Brigade were similarly heading for Oosterbeek, but they had to fight through particularly heavy opposition to get there. On Wednesday morning, the 10th Battalion led the advance and rushed their way through enemy fire to enter the Perimeter at 13:10. Only sixty men arrived, however; a substantial number of the remainder had become separated in the woods and many were captured.
Brigade Headquarters and the 156 Battalion were unable to follow the 10th Battalion's lead as they were under a continual mortar bombardment and had to fight off repeated and severe attacks by infantry and tanks, some of which were equipped with flame-throwers. Casualties were heavy and progress was slow, yet it is a credit to the Brigade that the Germans did not realise that the paratroopers were in retreat, as they defended their positions fiercely and constantly counterattacked to throw the enemy back from lost ground. Amongst the 156 Battalion's many fatalities was its commander, Lt-Colonel Des Voeux. With very few of its officers remaining, Brigadier Hackett took temporary command of the Battalion and ordered Major Powell to spearhead a dangerous charge to capture some hollow ground several hundred yards ahead of their present position. This move was successful, however the one hundred and fifty men that subsequently entered the hollow were pinned down for the next eight hours, and half of them became casualties. Eventually Brigadier Hackett ordered the survivors to break out with a bayonet charge, which was a complete success that carried them into the positions of the 1st Border's "A" Company.
Meanwhile "B" Company of the 7th KOSB had spent the night at the Hotel Wolfheze, and in the morning they joined up with that portion of the 156 Battalion that had mistakenly entered the village during the confusion of the previous day's withdrawal but had, during the morning, been forced to abandon it. This group was out of contact with the remainder of the Division and spent the morning awaiting orders that did not come. In the afternoon, Major Forman, "B" Company's commander, led the force south-westwards where he hoped to meet British troops, however he could not have known that he was marching away from the Perimeter. Tired and hopelessly short of ammunition, the men were unaware until it was too late that a strong German force, who had been tracking their progress, had surrounded them whilst in a most vulnerable position. Without opening fire, the Germans called upon them to surrender, leaving Major Forman with no option but to comply. Some men from the 156, who were positioned somewhat apart from the KOSB, were able to slip away but most were captured soon after.
The 4th Parachute Brigade's withdrawal into the Oosterbeek Perimeter was now complete, but it had been at great cost. Of the two thousand one hundred and seventy men that had dropped on DZ-Y two days previously, only five hundred men remained, including the numbers of those in the 11th Battalion with the Lonsdale Force. In addition, the Brigade suffered particularly heavily in terms of its leadership structure, with very few officers present and unhurt.
Of the original ten thousand-strong 1st Airborne Division, a mere three thousand six hundred fighting men, excluding medical staff, defended the Oosterbeek Perimeter. Having been under continuous attack for three days, they were exhausted, hungry, and short of ammunition. The 1st Airborne Division had never been designed to fight its way through such heavy opposition, and their advances of the first few days had cost them dearly. However the men who had made it into the Perimeter were now able to fight the defensive battle for which they had been trained. Their only orders now were to dig deep into their present positions and defend them fiercely until XXX Corps arrived.