Steege married Joan Tait on 5 January 1946; they had a son and a daughter. He was appointed RAAF Director of Operations in February. In December 1946, he resigned from the RAAF, joining the New Guinea Administration as a patrol officer the next month. He rejoined the Air Force as a wing commander on the outbreak of the Korean War in June 1950. The following month, he accompanied Major General William Bridgeford's mission to Malaya. Steege assumed command of RAAF Station Schofields, New South Wales, in September 1950, and commenced a jet training course at RAAF Station Williamtown early the next year. On 16 August 1951, he was posted to Kimpo, South Korea, as commander of No. 77 Squadron, shortly after its conversion from P-51 Mustang piston-engined fighters to Gloster Meteor jets. One of his first actions, following discussions with the US Fifth Air Force, was to take the Australian unit out of its then-current air-to-air combat role, and curtail its operations in "MiG Alley". Two encounters between No. 77 Squadron and Chinese MiG-15s had convinced Steege that the straight-winged Meteors were outclassed as fighters by the swept-wing MiGs. His decision caused controversy as some UN commanders believed that proper training and tactics would have allowed the Meteor to remain competitive as a fighter, while for the Australian pilots the change of role amounted to a loss of prestige. However, Steege was backed up by the Chief of the Air Staff, Air Marshal George Jones, and the squadron was relegated mainly to escort duty and local air defence. Morale suffered and it was not until after Steege's departure on 26 December that a suitable offensive role was again found for the Meteors, namely ground attack.