The carrier sailed from Devonport on 12 April 1949, carrying the 20th CAG. "Sydney" arrived at Jervis Bay on 25 May, where the aircraft of the 20th CAG and training equipment were offloaded for transport to the new naval air station, , before the carrier proceeded to her namesake city. "Sydney" arrived in Sydney on 2 June, and took over as Flagship of the Australian Fleet from on 25 August. 20th CAG was reembarked during August, and "Sydney" exercised in Australian and New Guinea waters until late November. From January to April 1950, the carrier continued training exercises and visited ports in south-east Australia and New Zealand, and on 7 June, she departed for England to collect the 21st CAG. The 21st CAG embarked in October, and the carrier returned to Australia in December. Before "Sydney" departed in late October, the British Admiralty suggested that she be deployed to the Korean War as relief for and her worn-out catapult, but this was withdrawn because of the plan's drawbacks.