Just in case anybody is interested...
I was born in the UK in 1984 after the laws were changed. My parents weren't British citizens - they are Australian - but had permanent residency. The High Commission advised me that I couldn't apply for a passport unless my parents' passports from the time of my birth were stamped with "indefinite leave to remain". Fortunately they had kept their old passports, and they did indeed have the stamp.
On that basis I applied for - and was granted - a British passport. I sent all the documents to Canberra and two days later - by express courier - a passport appeared. A little bit surreal - instant citizenship!
As far as I'm aware, Australia's policy on dual citizenship is "we don't care, but don't come crying to us if you get called up for national service".