6,500 British and Hessian troops set up encampments all over the islands in the bay. Colonel Richard Prescott was the commander of the forces that occupied Aquidneck Island. He made his headquarters on a farm outside of Newport.
Before the British arrived, the bay had been patrolled for months by Major General Wallace's ship, the Rose. General Wallace terrorized the people of Rhode Island, demanding provisions for his troops, firing on port towns and small island, and blocking any ships from leaving or entering the harbor. Newport was the most important port in the colonies until the British blockaded it in 1776. The city was virtually shut down for three years.
Most of the Hessian troops camped outside the city, their reputation as fierce fighters so agitated the inhabitants. British troops took over abandoned buildings for their barracks, churches, warehouses, and private residences. Before the occupation, Newport boasted a population of about 2,000. Though three-quarters of them left the island when it was clear the British intended it as a winter camp, the addition of 6,000 troops made for crowded conditions in Newport. Harsh winters and a severe hurricane in 1778 left the island almost treeless. There were constant shortages of food as well.
If you are interested in reading a first-hand account of the occupation of Newport, the diary of Hessian soldier, Johann Conrad Dohla, A Hessian Diary of the American Revolution (Bruce E. Burgoyne, Editor) is a great place to start.
Another diary I found extremely useful was that of British soldier, Frederick Mackenzie, published by Harvard University Press in 1930.
My third novel, A Notable Occupation, is set in occupied Newport. It is the story of a Jewish woman whose family runs guns and ammunition to the patriots from the Dutch island colony of St. Eustatius. Look for A Notable Occupation on Amazon.com in the spring of 2013.