This station was created by Bala & Dolgelley Railway solely for Sir Watkin-Williams-Wynne, who was a major shareholder and later a Director of the GWR. It was named after his house on the far shore of the lake, which has since become a multi-activity educational centre for Urdd (the Welsh Youth organisation).

When the Narrow Gauge Bala Lake Railway was established, Flag Station as it became known was largely unused until the Bala Lake Railway Society started to stage Santa Train weekends. For this one weekend of the year, Flag Station becomes Santa's Halt. Steam-haulewd shuttle trains run from Llanuwchllyn down to Santa's Halt, delivering hordes of children and excited parents, to see the great man.

In 2006 the old wooden station building was demolished and aided by money from the Society operated Santa trains, the railway company employed a contractor to build a replacement in concrete block and to clad it in split log, to closely resemble the old structure.