Eager as ever, Captain Mainwaring takes charge of the HQ-instructed physical training. The men's wariness to 'strip down' for it was right, Pike's mum embarrasses everyone when she drops by. The military challenge follows in the person of Captain Ogilvie, who announces his professional troops will attempt to penetrate the Home Guard platoon's HQ by way of exercise.
The platoon have been told that at the invasion signal, the ringing of the church bells, they must meet up at one of two rallying posts, Godfrey's cottage or the Novelty Rock Emporium. When the bells sound half go to the one and half to the other. Jones has forgotten his helmet, and Godfrey lends him a German one, which leads to his being mistaken for the enemy and fired at. Godfrey's sisters shake a table-cloth out of the window and this is interpreted as a white flag of surrender until Warden Hodges explains that there is no invasion, it was all a mistake.
When Private Walker gets his call-up papers to join the regular army it comes as a shock to the platoon because he is useful to them for his black market activities. Wilson is chairing a committee and tries to get him turned down whilst Jones has him jumping off a ladder barefoot to induce flat feet. Ultimately he does get turned down because he is allergic to corned beef.
On parade Mainwaring notices that Wilson is looking even more distracted than usual and asks him what is wrong. Wilson has heard Mavis telling Pike that 'a little Arthur is on his way' and assumes that he has got Mavis pregnant. Mainwaring tells him to do the decent thing and marry her but when it turns out that the little Arthur is a ten-year-old London evacuee that Mavis has taken in there is no wedding.
Captain Mainwaring is told that he can promote one of the privates in the platoon to lance-corporal and he chooses Frazer as being the most efficient. Unfortunately this leads to a bitter rivalry between Frazer - who keeps dishing out charge sheets and becomes unpopular - and Jones, culminating in a fight between the pair of them, and ultimately Mainwaring has to return Frazer to the ranks.
Whilst on fire-watching duty the platoon see a man shining a torch. He speaks with a European accent and has a dog called Fritz and they arrest him as an enemy agent. However, the man - Sigmund Murphy - tells them that he is a British subject and even helps them put out a fire in the church hall, after which Hodges explains that Sigmund is indeed a British citizen and the husband of his Auntie Ethel.
Mainwaring gives the platoon a lecture in communications but when a German plane crashes into the town's reservoir it becomes obvious that many of the men have no idea how to use a telephone and, when Mainwaring gets through to the main exchange to notify the incident, the operator is no help. Whilst a guards officer attempts to take command of the situation from Mainwaring, Walker saves the day by getting the reservoir manager to open the sluices, forcing the Germans to swim for it.
Mainwaring is extremely annoyed that all the platoon - except Godfrey, who was too slow - have used up all their ammunition firing in vain at a low-flying German aeroplane. An inquiry is ordered - along with a new case of ammunition, which duly arrives. The captain in charge of the inquiry, which takes place in the church hall in competition with choir practice, feels it a waste of his time but talks the men through what happened. Jones says he gave the order to shoot. Mainwaring corrects him by saying 'Fire', which the platoon does, making a hole in the roof.
A large field gun has been delivered to the church hall for a demonstration by the platoon but none of them know how it works. After a process of trial and error using models to represent the town, the time comes for the gun to be fired but the men get tangled up in the netting enclosing it.
After Mainwaring complains that the men's saluting is sloppy a runaway barrage balloon appears with the verger clinging onto it. He is rescued and various people, including Godfrey's sister Cissie, are asked to hang onto it until Mainwaring takes charge. Unfortunately for him it takes off in the breeze with him holding onto the other end of its rope, dragging him through trees and a haystack until it stops on a railway bridge. The men are about to secure it but then an officer comes by and in order to perfect the saluting so beloved of Mainwaring they have to let go ...
Pike's work is suffering because he is distracted by his girl-friend Violet, whom Mainwaring regards as common as her mother used to clean for him. Furthermore at the upcoming platoon dance Pike is going to announce his engagement to her, which alarms Wilson as Mavis would never let her baby go. Mainwaring arrives at the dance with a black eye after a fight with his wife and, despite efforts by Jones - doing impressions - to stall Pike, the lad announces his big news. Mavis faints. Later she locks Wilson out of the house for not telling her of her son's plans and he ...
It is revealed that Private Godfrey was a Conscientious Objector in the First World war, leading Mainwaring and some of the platoon to brand him as a coward. However, during an exercise in which Mainwaring collapses with smoke inhalation, it is Godfrey who, at risk to himself, rescues him. When Mainwaring and the others go to visit Godfrey, recovering in bed, they see a photo of him with a military medal, won in the First World War when he was a brave stretcher bearer who saved many lives. Mainwaring is ashamed and asks Godfrey to be the platoon's official First Aid ...
Walker has found a discarded parachute which he cut up to make ladies' knickers. This leads to an embarrassing examination of the ladies' pants to determine their colour as British parachutes are white and Germans are cream. Using a tracker dog the platoon go into the woods where they trap a man with a foreign accent - but he is an Austrian bird-watcher hunting the rare golden oriole. Eventually a German parachutist appears, asking to be arrested.