Lowland temperate grasslands dominated by Themeda triandra (kangaroo grass) are an endangered ecosystem in southeastern Australia. Grass biomass must be removed frequently to maintain plant diversity, but few studies of the impacts of different biomass removal techniques have been undertaken, and no rapid monitoring schemes have been developed. Low species densities in many reserves (due to past stock grazing) make it difficult to assess the effects of management regimes on plant diversity. Management impacts could be assessed by planting indicator species in replicated enhancement plots and subjecting these plots to adaptive management trials. A protocol for selecting potential indicator species is described, based on a regional quadrat database, using clearly defined criteria. Potential indicator species need to be conspicuous, easy to identify and abundant in high quality diverse grassland remnants, to have relatively broad ecological tolerances, to occur in sites that are relatively species rich and have a comparatively low cover of dominant exotic species, to commonly persist at low densities in long-grazed reserves, to be responsive to changes in management, and to have been studied ecologically. Only three species from western Victorian grasslands satisfied these criteria: Calocephalus citreus (lemon beauty-heads), Chrysocephalum apiculatum (common everlasting), and Leptorhynchos squamatus (scaly buttons). All are widespread, herbaceous, hemicryptophytic daisies. Despite a number of caveats, the scheme has the potential to provide a more clearly focused framework for grassland ecosystem management than currently exists.