Meanwhile on the southern wing the Soviets were planning their own offensive in what is known as the Staraya Russa Offensive Operation. This envisaged the newly formed Soviet 48th Army attacking from the Novgorod region along the west side of Lake Ilmen, while the newly formed 34th Army, supported by 11th and 27th Armies, would attack south of Lake Ilmen. The Soviets concentrated 8 rifle divisions, a cavalry corps and a tank division for the offensive, with the objective of capturing Staraya Russa and Dno station, and destroying 16th Army’s 10th Infantry Corps. The offensive commenced on 12th August and immediately threatened to overwhelm and trap 10th Infantry Corps against Lake Ilmen.
On 13th August the 56th Motorised Corps (now with only two motorised divisions) was ordered to disengage at Luga and transfer northwards on 15th August to Lake Samro (taking only 3rd Motorised Division). Once there 56 Corps would drive towards Leningrad in parallel with 41st Panzer Corps to its north. However, the Soviet Staraya Russa offensive had now panicked von Leeb, and the northward transfer of 56 Corps was reversed whilst still in progress. Instead, 56th Motorised Corps was sent south posthaste, simultaneously transferring from the command of Panzer Group 4 to 16th Army. 56 Corps (now again with two motorised divisions) was then redeployed by 16th Army to attack the Soviet 34th Army in flank whilst the rallying 10th Infantry Corps would continue to hold the line against the flagging Soviet push. The Luftwaffe’s I Fliegerkorps and VIII Fliegerkorps were also repositioned to provide air support.
On 19th August 56th Motorised Corps’ attack caught the 34th Army as planned, in the flank and by surprise. The 34th Army was badly damaged and attempted to withdraw. By 22nd August the 56th Motorised Corps reached the Lovat river having captured 12 000 men from the retreating 34th Army. While fighting 10th Infantry Corps and 56th Motorised Corps from 10th August to 1st September, the Soviet 11th, 27th and 34th Armies sustained 128 550 casualties and lost 481 tanks. In late August the 16th Army, still with the 56th Motorised Corps pushed deeper into the Valdai Hills. In early September they linked up with the 57th Panzer Corps, as Army Group Centre’s left wing drove north, and supported the capture of Demyansk on 7th September.