I don't expect you'll get much response to this question, because not many people grow this native Australian species. That said, I've been interested in Microcitrus for many years and have a couple of fruiting seedlings of Microcitrus inodora in my UK greenhouse. I treat them no different from any other potted citrus, and have had no problem with fruit setting or subsequent dropping.
So not much help there!
This variety is native to Queensland wet rainforest, so Sydney's climate isn't exactly right. Your idea of extra watering (and I suggest misting, too) around flowering time is probably a good idea. But you say this is 'first crop'. Is this a seedling or grafted plant? And how long has it been growing in its present location? Does it look generally healthy? Perhaps it just needs more time to get established.

Thanks Citrange. I am quite familiar of its habitat in FNQ. The plant itself is about 5-6 years old is not grafted. it has flowered successfully for 3 years.
Now me not being a citrus afficionado, It seems to have a habit of growing simultaneously whilst flowering. This alone seems a bit odd and possibly may have something to do with it (?)
It lives quite happily in a sheltered position in a pot. It receives direct sunlight and dappled sunlight all the morning and mostly shade for the afternoon. Generally speaking it is very healthy. The soil mix is slightly acid and free draining. As suggested it receives alot of water and then potassium biased fertiliser prior to flowering. The fruit drop when they are 5mm long.
Any suggestions would be gratefully appreciated. andrew