Preheat the oven to 230°C or Gas Mark 8. Dice the bacon - you need the fat from streaky bacon here as we are going to brown the meat and vegetables in the fat. Back bacon will dry out.Simmer the bacon in boiling water for 10 minutes and place on kitchen towl to dry. This removes the excess smokey taste. If there is still bone in the steak, trim it of. Do the same for all the excess fat. Cut the stewing steak into 3-cm cubes. Dry the meat thoroughly, using kitchen towl. If the meat isn't dry, it won't brown but steam instead.Note: I recommend using chuck steak as it is marbled with fat that will keep the meat tender and moist. Be careful when using leaner cuts as it may become dry and tough. In a heavy-based caserole, heat the olive oil over moderate heat. Fry the bacon until golden brown and the fat has cooked out into the olive oil. Remove the bacon and place aside. Now, in the baon fat and in small batches, brown the meat evenly on all sides. Remove from the caserole and add to the bacon. Lower the heat and in the same oil, fry the vegetables until browned. Return the beef and bacon to the caserole and season well. Sprinkle over the flour and toss well. Place the caserole, uncovered, in the middle of the preheated oven for 4 minutes. Toss again and return to the oven for 4 minutes more. This helps the flour brown and creates a light crust over the meat. Remove from the oven and reduce the heat to 160°C or Gas Mark 2.
Stir in the wine and enough beef stock to barely cover the meat. Add the tomato paste, garlic and herbs. Bring to a simmer, then cover the caserole and return to the lower rack of the oven. Regulate the heat so that the liquid simmers very slowly for 3-4 hours. Check every 30 minutes to see if there is still enough liquid in the caserole. Add stock or water if necessary. The meat is done when it is easily pierced with a fork and starts to fall apart. Continue to prepare the onions and mushrooms. To sauté the mushrooms, heat 1 tbsp of butter and 1 tbsp of olive oil in a pan over high heat. Fry the mushrooms for 8 minutes until uniformly browned. Note, at first the mushrooms will absorb the fat but as it starts to brown, the fat will be released again.
To brown-braise the onions, heat 1 tbsp of butter and 1 tbsp of olive oil in a heavy-based pan until the butter stops foaming, by which it will be hot enough to brown the onions. Add the onions and roll them around in the pan until slightly browned. Add in the 150 ml beef stock (or water) and simmer, covered, for 40 minutes or until the stock has evaporated and the onions are tender but, importantly, retain their shape. Keep a close eye to prevent overcooking or burning the onions.
Now, pour the contents of the caserole into a sieve. Return the beef, bacon and vegetables to the caserole. Simmer the cooking liquid for 1-2 minutes, skimming off any excess fat as it rises. You should have about 500 ml of sauce, thick enough to coat the back of a wooden spoon slightly. If it is too thin, boil for 5 minutes more. If it is too thick, add some stock. Taste for seasoning.
Arrange the onions and mushrooms over the meat and pour over the sauce. Serve with fresh parsley over baked, crushed potatoes or polenta.