 On 8 August 1898, the company opened the Waterloo & City line, a deep level underground railway that ran directly between Waterloo and Bank–Monument station in the City.This gave the company the direct commuter service it had long desired (albeit with the need to change from surface to underground lines at Waterloo).With Waterloo now destined to remain a terminus station, and with the old station becoming a source of increasingly bad will and publicity amongst the travelling public, the L&SWR decided on total rebuilding, in a project they called the "Great Transformation"

Legal powers to carry out the work were granted in 1899 and 1900.