This service was pioneered in Australia by the Victorian Division of the Australian Red Cross (ARC). The scheme, based on the British model and developed by Dr Lucy Bryce, among others, was established in Melbourne in 1929 and initially only available to metropolitan hospitals. By the late 1930s, decentralised units were operating across Victoria. The BTS expanded dramatically during World War II. The Red Cross, along with the Army Serum Unit, was instrumental in developing procedures including blood group testing of soldiers, the processing of blood into serum, the development and use of mobile emergency blood transfusion services, and the development of links with research laboratories such as the Walter and Eliza Hall Institute and the Commonwealth Serum Laboratory.
At the end of the war, the government invited the Red Cross to establish a National BTS. State Divisions of the Red Cross, which had developed blood services during the war years, inaugurated a BTS largely modelled on the Victorian scheme. Ongoing civilian demand and a range of technological and scientific developments ensured the expansion of the BTS in the postwar period. Initially the BTS had been solely funded by the Red Cross through donations, and the use of voluntary workers, but increasing demand resulted in the Commonwealth and State governments providing majority funding from 1953.
Originally located at the Royal Melbourne Hospital, the Blood Bank later moved to Flinders Street and then to its present location in South Melbourne. The period since the 1980s has probably been the most difficult despite the fact that the Australian BTS was the first in the world to initiate routine testing of all donors for the AIDS virus. In 1996, in a major restructure, the ARC Blood Service was created, effectively separating it from the Red Cross.