With the Austrian-Hungarian occupation of Banja Luka on 31 July 1878 the management of the town was reorganized and BL became the center of the region. By the 1879 census BL had 9560 citizens and in 1885, 11375 citizens. A considerable change of the conditions contributed to the development of the fight for civil freedom, cultural development and economic progress at the time. The publication of the journals began, cultural and education societies were founded. The most significant figure of that time was the great Serb poet and writer Petar Kochic who left a deep trail in the history of these areas with his cultural and political activities at the beginning of this century. For years the statue of this great man decorate the central park named after the poet and his works are still read with interest.
WW I brought suffering to the people again. The freedom was welcomed with happiness as well as the creation of the Kingdom of Yugoslavia. From 1918 Banja Luka became the center of political and cultural life of the whole Krajina, and from 1929 becomes the capital of the Vrbas Principality. During the Kingdom of Karadjordjevic dynasty, Banja Luka got its most beautiful buildings and became The Beauty of Krajina, as this town is called even today.
The WW II brought the dark ages to this territory again. In 1941 the mutiny rouse against German nazis and ustashas, the army of the fascist Croatia. During the WW II in the broad surroundings of Banja Lujka German army and ustashas killed in the concentration camps and in many different ways almost million people, predominantly Serbs. The victory in WW II was welcomed by the people of Banja Luka who started developing of the town. After the WW II Banja Luka made fast progress in spite of the socialistic capital city's centralism.
The progress was interrupted b the catastrophic earthquake that damaged almost the whole town on 27 October 1969. However, Banja Luka rouse again as Phoenix, and became nicer and nicer every day.
After the latest war and disintegration of Yugoslavia, Banja Luka is the capital of Republic of Srpska and is developing rapidly as a cultural, industrial and economic center important in this area especially in the beginning of new era.