When the Beech 1900 entered the Kempsey circuit area on approach to landing, the landing gear relay circuit breaker tripped during the landing gear extension. The tripped circuit breaker indicated an unsafe landing gear state. The gear unsafe indication in the Beech 1900 resides flush on the landing gear selector handle in the form of a red light in the shape of a tyre. As the Captain selected landing gear down, the gear selector handle cycled through the transit position for a microsecond before the circuit breaker popped and the unsafe red light remained illuminated. The Captain then entered a holding pattern of orbits above the airfield in VMC at 1500 ft AGL while the First Officer initially attended to the landing gear problem. During the holding pattern, the crew consulted the abnormal checklist but elected not to manually extend the landing gear at Kempsey. The crew made a decision to divert to Williamtown where better emergency facilities were made available. On arrival at Williamtown, the crew extended the landing gear manually and received 3 green lights to indicate that the gear was fully deployed and functioning correctly. The aircraft landed without further incident. The aircraft Captain and First Officer demonstrated optimum crew co-ordination and decision-making. The aircraft's landing gear and wiring system was inspected and found to be without fault. The aircraft landing gear was further tested on jacks and cycled without fault. As a pre-cautionary measure, the landing gear pump relay, actuator lock switches, selector handle, and time delay printed circuit board were replaced. The extension of the aircraft's landing gear was subsequently and successfully flight tested at varying airspeeds and attitude combinations. The aircraft was then returned to service.