This study examines the combined capacity of rubber powder inclusion and polymer treatment in solving the swelling problem of South Australian expansive soils. The rubber powder was incorporated into the soil at three different rubber contents (by weight) of 10%, 20% and 30%. The preliminary testing phase consisted of a series of consistency limits and free swell ratio tests, the results of which were analyzed to arrive at the optimum polymer concentration. The main test program included standard Proctor compaction, oedometer swell–compression, soil reactivity (shrink–swell index), cyclic wetting and drying, crack intensity, and micro-structure analysis by means of the scanning electron microscopy (SEM) technique. The improvement in swelling potential and swelling pressure was dependent on the rubber content, with polymer–treated mixtures holding a notable advantage over similar untreated cases. A similar dependency was also observed for the crack intensity factor and the shrink–swell index. The beneficial effects of rubber inclusion were compromised under the cyclic wetting and drying condition. However, this influence was eliminated where the rubber powder was paired with the polymer agent. A rubber inclusion of 20%, preferably paired with 0.2 g/l polymer, was suggested to effectively stabilize South Australian expansive soils.