sorry, just want to elaborate now that i'm not feeding DD

ultimately it is your decision to do what you feel is best - however, if you go the "paternity unknown" path with centrelink/CSA be prepared for some heavy questioning about how the pregnancy came about etc (one night stand). keep in mind - you've already had communication with him so he knows you are pregnant and who knows what he has said to his wife (or what she may find out in the future)
Centrelink will expect you to have a meeting with a social worker to discuss paternity unknown - it is up to the social worker to put a maintenance exemption on your file - if there is reason to believe you may know who the father is, you will be expected to follow up with legal aid to have paternity testing carried out.

keep in mind that,if his wife does find out, and decides to be a vengeful person, all it takes is a phone call to C'link to notify that you know of paternity. anyone who knows of your situation can "dob you in".

the federal government (rightly so) have set out to make sure that the wellbeing of children is seen to by BOTH parents. for some, where violence etc is involved, it removes the person from the picture altogether - but in situations such as this, it really is a case of this man being financially responsible for his child.

there is a hell of a lot to take into account when deciding custody IF he got narky with you (and it has to be him - nothing the rest of them can do to be honest).
having said this, i was referring to shared care etc. if the grandmother finds out, she can take you to mediation and on to court to be granted access to her grandchild. extended family have been given legal rights to have access to children and, no matter the relationship between you and dad, she can fight for it.

good luck making your decision

BG