To test diesel traction for mainline use, the LMS built two diesel locomotives in their Derby works with the help of English Electric. Overall designer at Derby was George Ivatt. The two locomotives were numbered 10000 and 10001 and delivered shortly before nationalisation, so 10001 was already carrying its BR livery when it left the factory. They were intended for mixed traffic, what included express trains at up to 100 mph (161 km/h) and freight trains of more than 1,000 tons.

The locomotives were designed with structural longitudinal frames which carried all the equipment. Power came from a turbocharged English Electric 16-cylinder with a net output of 1,600 hp. As with most later British diesel locomotives, power was transmitted electrically to nose-suspended traction motors. In the end, the locomotives were geared for 93 mph (150 km/h) for a higher pulling power in freight service. The bogies were specially designed for these locomotives and influenced the future British bogie design.

British Railways designated them class D16/1 and also compared them to the diesels designed by Bulleid for the Southern Region, which were designated D16/2. Usually, they were used in the London Midland Region, what was roughly the old LMS network. There they were also used for the Royal Scot between London Euston and Glasgow and often worked together with very heavy trains. Additionally, the were also used in freight service, especially in winter when the steam heating boilers suffered from problems. One locomotive managed to haul a 1,100-ton coal train up an incline of 1 to 133 with 25 mph. They were withdrawn in 1963 and 1966 and scrapped. In 2011 the Ivatt Diesel Re-creation Society announced that they are planning to build a new one.