Conversion of the Melbourne suburban system to electric operation commenced in 1919 and was completed by 1930, creating what was claimed at the time to be the world's largest electric suburban rail system. 1937 saw the introduction of the streamlined Spirit of Progress passenger train, with air conditioning and all steel carriage construction. Diesel power was introduced in 1951 with ten F-class diesel-electric shunting locomotives, followed by B-class mainline diesel-electric locomotives in 1952/53.

A standard gauge line connecting to the New South Wales system was constructed in 1961 allowing through trains to operate between Melbourne and Sydney, Australia's two largest cities, for the first time. The last steam locomotive was withdrawn in 1972.

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