A limited-area grid point model is nested at resolutions of 250 km and 125 km within a spectral general circulation model for simulations of perpetual January climate over the Australian region. The spectral model is run for 300 days and provides the lateral boundary conditions for the nested model runs. In these experiments the physical parameterizations are kept as similar as possible. The results show that the limited-area model significantly improves the simulation of January climate, particularly in regions of steep topography. Some problems are described regarding the integration of the two models, including the generation of spurious precipitation near the boundaries of the nested model and limitations of the soil temperature scheme. Problems relating to the applicability of the technique to tropical domains are also discussed. The simulation in the interior of the domain is good; in particular, the simulation of precipitation is significantly improved compared to that of the general circulation model.