The prime locations of the central business district of Melbourne are underlain by extensive deposits of a very soft and highly compressible soil, locally known as Coode Island Silt (CIS). This soft deposit poses serious challenges for the design and construction of economic foundations. The conventional practice for almost any construction over this soft soil is to use pile foundations extended to Melbourne mudstone layer situated at about 30 m depth. Results from recent researches on employing soil mixing technique to improve the engineering properties of this soft soil by using different additives have been found to be promising. Pyrite bearing CIS was treated with lime-activated slag of various proportions. Presence of pyrite is responsible for creation of acidic environment through its oxidation and thereby hindering the progress of cementitious reactions. Through experimental study it has been found that providing higher amount of lime can be an effective way of overcoming the adverse effect of pyrite. Initial Consumption of Lime (ICL) test can be a useful tool to determine the minimum amount of lime required for the stabilization to be effective. The results of experimental investigations, consisting of unconfined compressive strength tests and XRD analyses, on soft CIS treated with lime-activated slag are presented in this paper. In addition, the importance of carrying out ICL test for the selection of additive dosage is highlighted by presenting the results of strength tests of CIS treated with lime contents both above and below ICL.