The present invention is concerned with a power supply system for railway traction applications including a multilevel AC/DC converter. The converter comprises a plurality of series-connected single-stage cycloconverters or direct AC frequency converters (20, 20', 20") connected between an AC supply line (11) and a traction transformer (21). The transformer is operable at a transformer nominal frequency below 3 kHz and above the AC line frequency. On the secondary side of the transformer, more than one parallel-connected secondary converter (22, 22', 22") are provided and connected to a DC link (23). In case of failure of one of the secondary converters, the multilevel AC/DC converter may continue to operate with reduced power delivered by the remaining operating levels.