In crystal it is to the right of vermillion city, which is the place you arrive when you get off the S.S Anne.
To get to it, you have to awaken the massive Pokemon blocking the way (Snorlax) by switching on your Pokegear and tuning it to 'Pokemon Sleep' or something like that.
Then if you click on the Pokemon it will wake up and battle you.
Then catch it or defeat it, and you will be able to get into diglett's cave.
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