Eastbound service is also running and all service is said to be on or close to schedule.
The smoke condition and loss of third rail power caused a westbound LIRR train, the 12:09 from Babylon, to become stuck in the tunnel under the East River.
A locomotive reached the stuck train and moved it to Penn Station.
LIRR spokesman Sal Arena said the repairs were completed in time for the morning rush hour.
Penn Station's 8th Avenue entrance had been closed due to overcrowding, but that has since reopened.
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