Victoria was the first Australian Colony to have its own flag.
In 1865, under the Colonial Naval Defence Act, passed by the Imperial Parliament, the Australian Colonies were empowered to provide, maintain and use vessels of war. A requirement therefore arose for each colony to have its own distinctive flag.
A despatch from the Secretary of State for the Colonies, in December, 1865, required that all colonial vessels of war wear a Blue Ensign with the seal or badge of the Colony in the fly and a Blue Pennant.
On the 4th February, 1870, a proclamation by the Governor directed that the badge of the Colony of Victoria be of the following design - "five white stars, representing the constellation of the Southern Cross."
On the 10th February, 1870, The Argus newspaper reported the first flying of the Victorian Flag:
"An event of some importance in the history of the Colony - the inauguration of the flag which has been adopted as our national ensign - took place on board H.M.V.S. "Nelson" (Victoria's first colonial warship) yesterday, and the inaugural ceremony was made the occasion of a very pleasant trip down the bay..."
The design of the Flag of the Colony of Victoria was revised by a proclamation issued on the 12th November, 1877 by His Excellency Sir George Ferguson-Bowen, K.C.M.G., Governor and Commander-in Chief in and over the Colony of Victoria and its dependencies - "I, the Governor of Victoria, do hereby direct that all vessels belonging to, or permanently in the service of the Government of Victoria, shall wear the Blue Ensign, having in the centre of the fly thereof the distinctive badge of the Colony, viz - 'five white stars, representing the constellation of the Southern Cross, surmounted by an Imperial Crown"."
Following the accession of Edward VII the Lieutenant-Governor of Victoria, the Honorable Sir John Madden, K.C.M.G., informed the Secretary of State for the Colonies on 19th September, 1901, that henceforth in referring to Victoria, the word "State" would be used in place of the word "Colony", and that in the design of the State Flag, the crown would take the form of the St. Edward's Crown. (For a discussion on the styles of Royal Crowns, see the page on the Armorial Ensign.)
Since this date, the design for the State Flag has not been changed .
Proclaimed 12th November, 1877, Government Gazette No. 119, dated 30th November, 1877 and amended by Despatch No. 56, 19th September, 1901.
Reference: Official VIC Website