Clay and organic matter, when incorporated together in a sandy soil, improved soil aggregation in association with both microbial activity and soil strength. Incorporation of clay into sandy agricultural soils in south-western Australia is a practice used to overcome water repellence, but the addition of high levels of clay can cause hardsetting. We investigated the extent to which addition of clay and organic matter would improve aggregate stability of a sandy agricultural soil from Meckering, Western Australia without negatively affecting soil strength. Four levels of subsoil clay and three levels of lucerne hay were compared in topsoil incubated for up to 42 days at two temperatures. Addition of both clay and lucerne hay together increased stable aggregation and the longer the period of incubation, the greater the macroaggregate stability. A decrease in soil respiration associated with increasing level of clay added may be related to protection of organic matter. Soil strength increased when the amount of clay alone was increased, but addition of both clay and organic matter decreased soil strength. Soil amelioration with 5% clay and 0.8% organic matter was most effective at improving the stability of macroaggregates without hardsetting. The non-linear relationships observed demonstrate the importance of understanding interactions between biological and physical components of soil fertility in relation to the sustainability of land management practices.