The 367 emigrants along with 44 sailors were heading from Liverpool to Melbourne aboard the Cataraqui.

But these souls would never arrive in Australia as their 73-metre vessel would be torn to sheds on a jagged reef off the coast of King Island in the early hours of August 4.

The Cataraqui shipwreck remains Australia's worst civil maritime disaster, with 400 deaths and only nine survivors.

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"I don't think Australia has ever seen or experienced deaths like that and the bulk of people who died were from poor families," King Island Historical Society president Luke Agati said.

"The reaction in Melbourne of course was shock, which prompted the desperate need for a lighthouse on King Island.

"From that period on, until the (Cape Otway) Lighthouse was built, all vessels were ordered not to go through the Bass Strait."

The tragedy remains etched into the minds of King Islanders, who gathered on Sunday to recognise the 175th anniversary of the shipwreck.

They met at a memorial marking a mass grave for the victims of the Cataraqui, along with wth Greta Robinson, the great granddaughter of the man who buried the bodies: David Howie.

They also unveiled a new plaque listing the names of everyone taken by the shipwreck and a ship's bell.

"It was a solemn event but people were so wrapped into it," Mr Agati said.

Chair of the Cataraqui 175^th Commemoration Committee Kath Hunter said the scale of the disaster and its impact on maritime policy are key reasons why the incident is still commemorated today.

"King Island's shores are littered with shipwrecks and this was probably the most memorable," she said.

'"It was really the straw that broke the camel's back that started the British government pushing for more navigational aids.

"And that's how Cape Wickham Lighthouse and Cape Otway Lighthouse were funded."

The new plaque and bell were funded by the King Island Historical Society and the council.

They were mounted on a monument built by the Lion's Club on the shipwreck's 150^th anniversary.