By now the division was too weak to attempt to reach Frost at the bridge. Of the nine infantry battalions, only one (1st Battalion, The Border Regiment) still existed as a unit, the rest were badly mauled or scattered. Urquhart made the difficult decision to form a defensive perimeter around Oosterbeek, abandoning the 2nd Parachute Battalion. By securing the Driel Ferry Crossing, Urquhart hoped to hold out until XXX Corps could reach them and establish a new bridgehead over the Rhine using the ferry crossing platforms.
The eastern side of Osterbeek was fairly stabilised after the retreat of the previous day, with numerous ad–hoc units under company commanders defending the approaches to the town. Major Richard Lonsdale had taken command of the outlying units that had retreated from Arnhem the previous day, and their positions weathered heavy German attacks before falling back to the main divisional perimeter at Oosterbeek. This sector was later designated Lonsdale Force and would remain the main line of defence on the south eastern perimeter. The Border Regiment held most of the western edge of the town, with scattered units filling the gaps to the north. As more units fell back to the new defensive area they were re-organised to establish a thumb shaped perimeter using the Rhine as its southern base.
The mixed units at Wolfheze began to fall back in the morning but several were surrounded and captured, including one party of 130 men. 150 men of 156th Parachute battalion led by Hackett himself became pinned down and took cover in a hollow some 400m west of the Oosterbeek perimeter. The men broke out in the late afternoon, with 90 men making it to the Border Regiment's positions.
Arnhem was strategic in the defence of the German Front with the town lying on the last natural barrier - The Rhine River. When Operation 'Market Garden' started, the Germans knew very quickly into the battle that the bridges were a key objective of the allied plans and as such threw every available reinforcement into Arnhem.