The outage began at 4.30am on Wednesday, but despite Telstra restoring phone calls by that night, Victoria's regional railway was still offline on Thursday morning.
At 11.30am V/Line announced it would gradually resume services from midday after extensive testing of train radio communications following the Telstra outage.
"V/Line is now implementing a staged return of services across the network, with the aim of restoring services this afternoon, in time for the peak," a spokesperson said.
"However, passengers are advised some service delays may still be experienced as the network returns to its normal timetable."
Passengers are reminded to check the V/Line website and app to get up-to-date information while the services are restored.
Previously, V/Line chief executive Will Tieppo said work had been done overnight to repair connectivity between train radio systems and the control centre.
"We are now in the process of undertaking testing for each of the train units that we've got here in Melbourne," Mr Tieppo told reporters at Southern Cross Station on Thursday.
Some commuters were forced to spend the night in city hotels because V/Line did not have enough buses to replace more than 300 cancelled services.
On Thursday, platforms at the train station were largely free from traffic, while commuters filtered into the bus terminal for a limited number of replacement services.
V/Line staff were out in force, distributing snacks to families, couples and returning holiday-makers as service announcements played overhead.
Elderly woman Pam Promnicz was having a hard time getting back to Warrnambool, concerned she had too many bags for the coach.
"I'd much prefer to be on the train," she told AAP.
Brian Rigby, who happens to be a network engineer, said the disruptions could have been avoided if the V/Line was not so dependent on the Telstra network.
"When Telstra has an outage, they're big ones," he said.
"It makes you wonder what happens if next time they go down and stay down."
On Thursday, Communications Minister Annika Wells said the telecommunications regulator ACMA had begun preliminary investigations into the outage, which affected transport, businesses, emergency services and healthcare.
Last year, Ms Wells increased penalties for telcos that fall foul of their triple zero obligations to $30 million.
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