The Office of the National Rail Safety Regulator is investigating the incident - a major safety breach that saw a train come dangerously close to hitting a maintenance vehicle on Saturday morning, which a union official has labelled a "monumental safety breakdown".

Frustrated racegoers and punters flocking to the Turnbull Stakes at Flemington Racecourse were told a "signalling issue" caused major delays on the Lilydale, Belgrave, Alamein and Glen Waverley lines.

The disruption happened just as new services were to be added from Southern Cross Station to the racecourse for the event.

But the true cause of the disruption was a major blunder, which saw a Glen Waverley train nearly hit a maintenance vehicle on the tracks outside of the city.

A photo provided to Fairfax Media shows the train stopped just metres away from the vehicle between Flinders Street and Richmond stations.

A maintenance worker in a high-vis vest can be seen sitting on the back of the vehicle facing the oncoming train.

Fairfax Media understands that a contractor working on the City Loop should not have been on the tracks, and was responsible for the breach.

Gerry Glover, an organiser in the Electrical Trades Union, described the incident as a "monumental safety breakdown".

"It's only because of the vigilance of the driver of that train that a tragedy was prevented," he said. "It's something that should never happen on a modern railway system."

Metro Trains was notified of the maintenance vehicle about 10:15am and "launched an investigation immediately to understand all factors involved", said spokesman Marcus Williams.

The train is said to have slowed and stopped more than 60 metres from the maintenance vehicle, and was moved to a platform at Flinders Street, where passengers disembarked.

The incident triggered a signalling response, which brought all trains in the vicinity to a stop.

"Trains were stopped while we ensured we had eliminated any safety risk and apologise to our passengers for the delays this caused, which we know were frustrating," said Mr Williams.

"We are absolutely committed to running a safe rail network."

The disruptions on Saturday were embarrassing for Metro, which was forced to suspend multiple services about 10:15am, just before they were adding new services at 11am for the race.

Buses replaced trains on the Alamein, Belgrave, Lilydale and Glen Waverley lines, with train services resuming about 11:30am, but with 10 minute delays.

It comes three months after Metro Trains was fined $1.2 million after a computer malfunction shut down the entire train network during the evening peak, leaving tens of thousands of commuters stranded on their way home from work.

The company forked out a further $627,000 to 175,000 to affected commuters.

The Victorian state government has entered a new seven-year contract with Metro Trains, which is due to take effect from November 30.

The conditions of the new contract are said to include higher performance targets and tougher penalties if targets are not met. This will include a requirement to compensate passengers up to $700,000 if a network failure results in more than 50 per cent of services cancelled or delayed by 30 minutes or more.

However, the government has still not released the agreement to the public.

A spokeswoman for public transport minister Jacinta Allan said the government was "aware of the incident on Saturday and would await the outcome of the investigation".

"Passengers deserve accurate, timely information about their train - something the new contracts address directly," the spokeswoman said.

Rail Tram and Bus Union branch secretary Luba Grigorovitch??? said the incident was the result of a lack of training of safeworkers, who are responsible for safety during construction or maintenance works.

"Skills shortages and casualisation have created poorly trained safeworkers leading to more dangerous outcomes for passengers and workers alike," she said.