From 1958 to 1960, opinion within the Australian military swung between reactivating "Sydney" as a fast troop transport ship and disposing of her. The Australian Army saw the need for such a vessel, particularly if war broke out in Southeast Asia: Australian forces would need to be rapidly deployed to the conflict, and sealift was the only way to effectively move the required number of personnel, equipment, and vehicles. However, the RAN did not want the cost of converting and maintaining "Sydney" coming from their share of the defence budget, as they felt there was no further use for her. As both strategic airlift and sealift with other naval or civilian vessels were unfeasible, "Sydney" was reactivated and converted into a fast troop transport ship during 1961 and 1962. All of her aircraft operating equipment was removed, her hangar was converted into accommodation and storage, and her armament was reduced to four single-mounted 40 mm Bofors. "Sydney" was recommissioned as a Fast Troop Transport on 7 March 1962, given the pennant number A214, and assigned back to the training squadron. From April 1962 onwards, "Sydney" was used to train the ship's company and Army personnel for the troop transport role, while supplementing the RAN's regular training needs. The troopship first saw full use in her new role in August 1963, when she was used to support an amphibious landing at Hervey Bay, Queensland during Exercise Carbine.