It proved to be a frantic scramble for a Shootout berth with the improvements coming right down to the flag.
Waters was in the hunt from the mid-point of the session, going quickest with a 1m13.812s before being shuffled back to second by Matt Payne.
The Tickford driver then stormed back to the top on his crucial final run, a 1m13.320s leaving him a tenth clear of the field and on provisional pole.
"Night and day different," said Waters of his Mustang compared to Friday practice. "Yesterday was a bit of a shock to us. I guess we tuned it up over yesterday and got the car better with those aero changes.
"[It was] much happier then, the car is definitely going in the right direction. It's still hard work out there, but we'll make it a bit nicer hopefully for the Shootout."
Payne was the sensation of the session, the rookie also improving on his final run to slot into second and ensure he'll make his Shootout debut.
Will Brown was best of the title contenders in third while Jack Le Brocq kept his good run of form going with the fourth fastest time.
Will Davison was the sole Dick Johnson Racing to make the Shootout with the fifth fastest time, teammate Anton De Pasquale having been shuffled down to 12th in the late flurry of times.
James Golding and Broc Feeney were sixth and seventh ahead of Ford drivers David Reynolds and Chaz Mostert.
Shane van Gisbergen will run first in the Shootout having narrowly made it through in 10th.
Interestingly the top 10 was an even split between the manufacturers with five Mustangs and five Camaros making it through.
That follows an aero change for the Fords which was meant to improve balance, but prompted scepticism from teams and drivers after Friday practice.
Series leader Brodie Kostecki, meanwhile, missed the Shootout altogether and will start today's 250-kilometre race from 15th.
The Shootout starts at 12pm local time.
Townsville 500 Qualifying results
| Cla | # | Driver | Car | Time | Gap |
|---|---|---|---|---|---|
| 1 | 6 |  Cameron Waters |
Ford Mustang GT | 1'13.3207 | |
| 2 | 19 | Matthew Payne | Ford Mustang GT | 1'13.4650 | 0.1443 |
| 3 | 9 | Will Brown |
Chevrolet | 1'13.4660 | 0.1453 |
| 4 | 34 | Jack Le Brocq |
Chevrolet | 1'13.5498 | 0.2291 |
| 5 | 17 | Will Davison |
Ford Mustang GT | 1'13.6148 | 0.2941 |
| 6 | 31 | James Golding |
Chevrolet | 1'13.6467 | 0.3260 |
| 7 | 88 | Broc Feeney | Chevrolet | 1'13.6766 | 0.3559 |
| 8 | 26 | David Reynolds |
Ford Mustang GT | 1'13.6889 | 0.3682 |
| 9 | 25 | Chaz Mostert |
Ford Mustang GT | 1'13.7406 | 0.4199 |
| 10 | 97 |  Shane van Gisbergen |
Chevrolet | 1'13.7427 | 0.4220 |
| 11 | 14 | Bryce Fullwood |
Chevrolet | 1'13.8077 | 0.4870 |
| 12 | 11 | Anton De Pasquale |
Ford Mustang GT | 1'13.8105 | 0.4898 |
| 13 | 20 | Scott Pye |
Chevrolet | 1'13.8539 | 0.5332 |
| 14 | 55 | Thomas Randle |
Ford Mustang GT | 1'13.9019 | 0.5812 |
| 15 | 99 | Brodie Kostecki | Chevrolet | 1'13.9206 | 0.5999 |
| 16 | 5 | James Courtney |
Ford Mustang GT | 1'13.9386 | 0.6179 |
| 17 | 8 | Andre Heimgartner |
Chevrolet | 1'13.9870 | 0.6663 |
| 18 | 3 | Todd Hazelwood |
Ford Mustang GT | 1'14.0117 | 0.6910 |
| 19 | 96 | Macauley Jones |
Chevrolet | 1'14.0220 | 0.7013 |
| 20 | 2 | Nick Percat |
Ford Mustang GT | 1'14.1740 | 0.8533 |
| 21 | 18 | Mark Winterbottom |
Chevrolet | 1'14.2213 | 0.9006 |
| 22 | 777 | Declan Fraser | Ford Mustang GT | 1'14.2448 | 0.9241 |
| 23 | 35 | Cameron Hill | Chevrolet | 1'14.3092 | 0.9885 |
| 24 | 4 | Jack Smith |
Chevrolet | 1'14.7560 | 1.4353 |
| 25 | 23 | Tim Slade |
Chevrolet | 1'27.3118 | 13.9911 |
| View full results | |||||
