The 102-year-old, 308m steel, iron and glass canopy is the longest surviving platform cover in New Zealand.
It was designed by George Troup, who also designed the ornate bluestone railway station building.
The Dunedin City Council bought the railway station in 1993.
The council has set aside $220,000 in its budget for the canopy replacement programme in the current financial year, and $280,000 for the 2009-10 year.
The work began in 2005, when the area directly outside the railway station building was replaced.
Council city property assistant manager, Rhonda Abercrombie, said last night stage two of the project involved work on the southern end of the canopy.
The northern end, by the Otago Farmers Market, would be completed next year.
The southern end had "pretty well had it", she said.
It was used regularly by people travelling on the Taieri Gorge Railway.
