On 23 May of that year the Melbourne, Mount Alexander and Murray River Railway Company was taken over by the Government.
On 1 April 1856, the Railway Department was established as part of the Board of Land and Works with George Christian Darbyshire being appointed Engineer in Chief. In 1855, the Government conducted enquiries and carried out surveys into country railways. The line was owned and operated by Melbourne and Hobson's Bay Railway Company, opening in 1854. Work began in March 1853 on the Sandridge railway line, stretching 4 kilometres (2.5 mi) from the Melbourne (or City) terminus (on the site of modern-day Flinders Street station) to Sandridge. On 8 February 1853, the Government also approved the establishment of the Geelong and Melbourne Railway Company and the Melbourne, Mount Alexander and Murray River Railway Company. On 7 September 1851, a public meeting called for the construction of Australia's first railway to linking Melbourne and Sandridge (now known as Port Melbourne), which led to the establishment of the privately owned Melbourne and Hobson's Bay Railway Company in 1853.