We study the role of hydrodynamic interactions in the collective behaviour of collections of microscopic active particles suspended in a fluid. We introduce a novel calculational framework that allows us to separate the different contributions to their collective dynamics from hydrodynamic interactions on different length scales. Hence we are able to systematically show that lubrication forces when the particles are very close to each other play as important a role as long-range hydrodynamic interactions in determining their many-body behaviour. We find that motility-induced phase separation is suppressed by near-field interactions, leading to open gel-like clusters rather than dense clusters. Interestingly, we find a globally polar ordered phase appears for neutral swimmers with no force dipole that is enhanced by near field lubrication forces in which the collision process rather than long-range interaction dominates the alignment mechanism.PACS numbers: 87.18. Hf,64.75.Xc, Active materials are condensed matter systems selfdriven out of equilibrium by components that convert stored energy into movement. They have generated much interest recently, both as inspiration for new smart materials and as a framework to understand aspects of cell motility [1][2][3]. They are characterised by interesting nonequilibrium collective phenomena, such as swirling, alignment, pattern formation, dynamic cluster formation and phase separation [4][5][6][7][8]. Theoretical descriptions of active systems range from continuum models [1, 9] to discrete collections of self-propelled active particles [4]. An influential classification of self-propelled active particle systems has been to group them into dry and wet systems [1]. Dry systems do not have momentum conserving dynamics (e.g, Vicsek models [4, 9] and Active Brownian particle (ABP) models interacting via soft repulsive potentials [10][11][12]), while wet systems conserve momentum via a coupling to a fluid (e.g. Squirmers driven by surface deformations [13][14][15] and Janus particles driven by surface chemical reactions [16]) leading to hydrodynamic interactions between active particles. Dealing with hydrodynamics leads to significant technical hurdles; as the motion of a self-propelled swimmer is affected by other particles due to both fluid flow and pressure, and even the two-body interaction between spherical squirmers in close proximity (near-field) is non-trivial, requiring sophisticated numerical analyses [17][18][19][20][21][22][23]. Therefore, converting this into an understanding of collective behaviour remains a significant challenge [24]. Because numerical simulations with hydrodynamics require significantly more computational power, studies of these systems have * E-mail: yoshinaga@tohoku.ac.jp † E-mail: t.liverpool@bristol.ac.uk relatively few particles or low resolution of fluid flow [25][26][27][28]. Hence, far-field approximations (swimmers as point multipoles ) [29] are often used to account for hydrodynamic interactions [30]. This clearly breaks down when the...