According to the Fourth Doctor, they were "an ancient race belonging to a mythical time of fairie folk and unicorns". Their leader said that they had been brought to Australia on ships for amusement purposes.
When the Doctor encountered the Wolf-People with Leela and Lillian Robinson, they were dying out. The Doctor had to leave Lillian with them because she had been injured. She lived with them for decades until all had died out except one girl and one cub, both of whom Lillian had named Erin. They were the only survivors because Lillian had given them some medicine left to her by the Doctor. Because they were not supposed to survive, the Doctor had to remove them and Lillian from their time and bring them to the Time Vortex. (PROSE: The Bushranger's Story)