A variable flow external rotor hydraulic machine (10, 10) has an inlet (26, 26) an outlet (28, 28), a rotor set having a first rotor (58, 58) mounted for rotation about a first rotor axis and a second rotor (68, 68) mounted for rotation about a second rotor axis, the machine being configured as either a pump or a motor, in which at least one of the first and second rotor axes is movable relative to the other to vary a leakage flow between the rotors.