Nearly 12 months after it shut, a solution has finally been identified to reopen Lydiard Street, with boom gates to be installed later this year.
However, no heritage elements are planned to be used in the operational part of the crossing.
The upcoming state budget will have $10.5 million set aside to complete the level crossing works, which will see standard half boom gates connected to the existing manual signalling system before being connected to a new automated system.
Work to reopen Lydiard Street is expected to begin in June or July with the temporary fix, which will be connected to the manual signalling system and operated from Melbourne, to be completed around September or October this year.
However, a permanent solution will take some time longer, with the automated system expected to be complete about mid-2022.
Public Transport Minister Ben Carroll said heritage consultants would be involved in incorporating heritage elements into the final design of the crossing which could resemble the Humffray Street level crossing or a similar on in Yarraville pending Heritage Victoria's approval.
"I have spoken directly with Minister Wynne in charge of Heritage Victoria, we want to get on with the job of making sure that the historical gates, that are such an important part of the cultural and social fabric of Ballarat, remain in the precinct," he said.
"We're working very hard to ensure that those gates still remain part of the Ballarat precinct and feel incorporated and that the community can still pay homage to that unique system that's operated here for so long.
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"We do want them to essentially remain in the precinct but they will not have a role where they open and close for traffic, it will be a boom gate automated system, eventually, but the gates will remain here essentially for public viewing and to pay homage to the unique Ballarat station that it is."
Mr Carroll said the new gates would prioritise safety for both train users and motorists.
"We cannot have a system that is essentially built for the 1860s conditions when we've added a $500 million investment in the Ballarat Line upgrade that is seeing more frequent services than ever before, 170 additional services to regional Victoria since we were elected," he said.
"We must upgrade our system and safety has to come first but we also should respect the heritage and ensure the gates can remain in the precinct as well."
Department of Transport head of transport services Nick Foa said the old signalling system was a key cause of delays on the Ballarat line.
"Of the Ballarat line, 60 per cent of delays and disruptions on the Ballarat Line were the result of an older gate installation," he said.
"That manual gate installation required a sensor to click back into place and for a CCTV camera to see that sensor click in to place, for a relay to go back to an operator in Melbourne to give a green light on his desk for the gates to be able to operate.
"The gates themselves... date back to 1862, but they're also responsible for 60 per cent of delays upon the Ballarat line, so it's really important also for the efficiency of the service and the reliability of the service for the people of Ballarat that we make make the change to the gates at this time."