Two red handfish live in a display tank after they were among 16 to be born in captivity, collected as eggs with their mother from one of their few remaining areas in south-east Tasmania several years ago.

The remaining hatchlings were released back into the estuary, but three were kept including the mother as part of a breeding program at Beauty Point, in conjunction with the CSIRO and the Institute for Marine and Antarctic Studies.

Until now, it was unknown if the newborns were male or female.

But on July 4, one of the red handfish spawnlings produced a pile of eggs of her own - conveniently in a display tank, so members of the public can watch the progress.

It was an important moment for researchers, proving that red handfish mature in their second year when they are ready to breed.

Females are known to produce eggs every year, but it just depends if they are fertilised by a male.

So now, the waiting game is under way.

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Seahorse World director Rachelle Hawkins - a member of the National Handfish Recovery Team - said it would depend if the second handfish in the tank was male, and if he had fertilised the eggs.

"We now know she's a female, I'm just hoping that the little guy with her is a male," she said.

"We've had their mother laying eggs in the past where they haven't had a male there. But this time, with a partner, there's been totally different interactions. We know that this partner did spend time at the eggs, so that gave us hope.

"This spawn is exciting because it's the first time it's happened in red handfish born in captivity."

For the past four weeks, the female has kept constant vigilance next to her eggs, patting them with her fins and walking around the pole repeatedly where they lay.

Only occasionally does she leave the eggs to have a quick feed, before returning.

They take between six and eight weeks to hatch.

Ms Hawkins said it was an exciting time for the project.

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"It could be another week before we know for sure, when little eyes appear in the eggs. That's when we know they're fertilised," she said.

"It could come to nothing, but it's still progress. We're on the fence still, the eggs are showing some changes.

"A big part of this project is educating the public. On the day they spawned, we had tourists everywhere and then I was in there with my phone taking a look. They've got no problem being on show while they do their thing."

The population of red handfish is believed to be about 100 adults in the wild, according to the conservation project, making it one of the world's rarest fish species.

Only two colonies are known, both on 50-metre patches of reef at Frederick Henry Bay east of Hobart.

In 2018, researchers undertook a dive in the area at the end of the breeding season in an attempt to collect eggs, but feared they may have missed them all, only to find a group believed to be the last eggs for the season.

They were hatched at the CSIRO and then brought to Seahorse World. IMAS is also taking part in the project, progressing a year behind Seahorse World.

In October last year, the hatched red handfish were released at an undisclosed location, marked with a fluorescent marker to aid in their tracking. They have since been re-sighted, indicating their survival in the wild.

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They live at depths less than 10 metres, usually under seaweed or seagrass adjacent to the reef. They face threats from loss of seaweed and seagrass habitat, often caused by invasive sea urchin, along with pollution, excessive nutrients in water and warming sea temperatures.

Direct human impacts include disturbances from anchoring and fishing, particularly during mating and breeding season.

Seahorse World is also taking part in a spotted handfish conservation project, and although the species is not as at imminent risk of extinction compared with the red variety, their numbers are fewer than 3000.

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