An Eastern Suburbs Railway was one of those originally proposed by John Bradfield that was cut short by the Great Depression and World War 2. An initial alignment had been set in 1926, which saw the line go North from underneath Railway Square next to Central Station up to Town Hall, before heading Northeast towards stations at Pitt Street and O’Connell Street, then going South to St James Station until it would head East roughly along Oxford Street towards Bondi Junction. Some initial construction was achieved, and a tunnel was partly built between Taylor Square and St James Station (though not reaching St James itself). If you look at the St James Station platform, you can see that it was actually designed to have 4 lines running through with 2 island platforms. Instead, today what would have been the two central lines form part of the one large platform.
Plans to build the line surfaced again after World War 2 in 1947, this time on the Kings Cross alignment that it would eventually follow. Future plans for an extension to North Bondi and Rose Bay were also on the table this time. After another brief period of construction, the project was abandoned again in 1952.
A third attempt to build the Eastern Suburbs Line commenced in 1967. This time the line would extend South past Bondi Junction, going to Randwick and then Kingsford. However, the line would only get built as far as Bondi Junction, and a planned station at Woollahra was scrapped after opposition from local residents. A proposal to extend the line from Bondi Junction to Bondi Beach was floated by the NSW Carr government in 1999 and would likely have operated like the privately operated Airport Line, with an additional surcharge for users of the Bondi Beach station. This too was abandoned, probably in light of the poor financial performance of the Airport Line.
The new line finally opened in 1979, with 6 stations: Central, Town Hall, Martin Place, Kings Cross, Edgecliff and Bondi Junction. Trains initially operated as a shuttle service between these stations, before the line was connected to the Illawarra Line down to Hurstville and Sutherland. This had the added benefit of removing Illawarra Line trains from the City Circle, improving congestion through the CBD railways. In fact, by adding an additional track pair (up until 1979 there were only 2 track pairs: City Circle and the North Shore/Western Line), the capacity through the CBD was increased by 50%.
However, the decision to truncate the line to Bondi Junction acted as a limit on this new capacity as Bondi Junction had not been designed as a terminus. It was therefore limited to 14 trains per hour, rather than the 20 trains per hour that would have been able to pass through it if it hadn’t been a terminus. This was finally resolved in 2006 when turnbacks were constructed at Bondi Junction Station as part of Cityrail’s Clearways program, finally allowing a full 20 trains per hour to pass through the line.