Originally a coal-mining township, Lambton was incorporated as a Municipality (including Jesmond, New South Wales), on 24 June 1871. The 1891 Census gave the population as 3,434. It was the first municipality in Newcastle district to be lit by electric light.

In the early years the miners of the township used to entertain themselves gambling on dog races known as the "Dog & Rat" because they would release a rat (wallaby) on flat open area then let their dogs chase it down the dog that caught the rat won (the rat won if it made it to the scrub)

In 1901 there were 14 churches, a Music Hall, Assembly Rooms, a Temperance Hall, a Mechanics' Institute, Miners' Institute, a Post, Telegraph and Money Order Office, a Savings Bank, Court House, Fire Brigade, Council Chambers, and fine public schools. There were collieries, coke-ovens and a soap-works at Jesmond.

In 1901 the Municipal Council had as Mayor: Matthew Thornton and Town Clerk: Thomas Johnson. In 1938 an Act of the New South Wales Parliament created a "City of Greater Newcastle", incorporating 11 municipalities into one local government area, including Lambton.

Historically Lambton has played an important part in the sporting history of the Hunter Region. Lambton Park was also the location of the first organised soccer match played in Australia between miners from Lambton and miners from Weston. Newcastle oldest rugby league football club "Western Suburbs (NCLE) Rosella's" was formed at Smiths Pub (also known as "Snake Gully" and "Bar 121")

The Member of the New South Wales Legislative Assembly who represented Lambton was Arthur Hill Griffith, Member for Waratah.

The largest and principal industry was the Scottish-Australian Coal Mining Company's Lambton Colliery, mine and estate managed by the three Croudace brothers: Frank, Thomas, and Sydney. It finally closed in the late 1950s although the railway line which connected it with Newcastle harbour was operational for about another decade because of other coal-loading facilities still operational at the mine. Today the entire area is covered with housing.

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Wikipedia