Lymphoedema develops after axillary clearance (ANC) in 25% of patients. This prospective, multi-centre study compared multi-frequency bioimpedance spectroscopy (BIS) with arm volume measurement to: (1) determine which test has better diagnostic accuracy, (2) identify factors predicting development of lymphoedema, and its effect on quality-of-life. Participants (N = 1100) underwent measurements pre and post-ANC surgery for breast cancer. Relative arm volume increase (RAVI) of >10% diagnosed lymphoedema. Predictors of lymphoedema were determined using logistic regression. Optimal diagnostic method was assessed using diagnostic accuracy. Quality-of-life was assessed using the FACT B + 4 questionnaire. Lymphoedema was diagnosed in 22.8% women using RAVI > 10%, 45.6% using BIS criteria, while 24.5% underwent compression sleeve application by 24 months. BMI > 30 was an independent factor for both development (p = 0.005) and progression (p = 0.015) of lymphoedema. RAVI at 1 month, BMI > 30 and number of involved nodes contributed to a novel scoring model to predict lymphoedema by 36 months. Larger decreases in QoL scores post-surgery occurred in lymphoedema patients (p < 0.001). Progression to moderate lymphoedema occurred in 15% patients after sleeve application. RAVI measurement was the best diagnostic tool for lymphoedema. BIS alone is not appropriate for lymphoedema screening or diagnosis. BMI > 30 predicted lymphoedema diagnosis and progression.