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Proclamation as a colony

Van Diemen's Land — which thus far had existed as a territory within the colony of New South Wales — was proclaimed a separate colony, with its own judicial establishment and Legislative Council, on 3 December 1825. Transportation to the island ceased in 1853 and the colony was renamed Tasmania in 1856, partly to differentiate the burgeoning society of free settlers from the island's convict past.

The Legislative Council of Van Diemen's Land drafted a new constitution which gained Royal Assent in 1855. The Privy Council also approved the colony changing its name from "Van Diemen's Land" to "Tasmania", and in 1856 the newly elected bicameral parliament sat for the first time, establishing Tasmania as a self-governing colony of the British Empire.

The colony suffered from economic fluctuations, but for the most part was prosperous, experiencing steady growth. With few external threats and strong trade links with the Empire, Tasmania enjoyed many fruitful periods in the late 19th century, becoming a world-centre of shipbuilding. It raised a local defence force that eventually played a significant role in the Second Boer War in South Africa, and Tasmanian soldiers in that conflict won the first two Victoria Crosses awarded to Australians.