The General Zionists and the Progressives were going to work together to attack the dominance of Mapai. They formed the Liberal Party. This party wanted all social services of the Histadrut were transferred to the government, more equality for private initiative, limited government involvement in the economy, and an emphasis on the enforcement of individual liberties. At the 1961 election the Liberal Party took 17 seats in the Knesset. So did the Cheroet Party. Cheroet and the Liberal Party started working together in Gachal. Then left the Progressives in the Liberal Party. They went on to form the Independent Liberal Party. In 1965 Gachal took 26 seats in the elections. Went to the left Mapai, Achdoet HaAvoda, Rafi and Mapam form the Labour Party.
The Lavon Affair, the position of David Ben-Gurion had become weaker. He led a cabinet that was formed by Levi Eshkol. His leadership was also attacked by the opposition of the Old Guard who still went to the Young Guard. The gap between the two groups proved to be insurmountable. In June 1963 Ben Gurion retired from political life. He spent the rest of his life in kibbutz Sde Boker and would not return. He was Israel, with one brief interruption, led 15 years.
Levi Eshkol took over the helm of Prime Minister Ben Gurion. Eshkol was born in 1895 in Ukraine and emigrated in 1914 to Palestine during the Second Aliyah. He worked in Petah Tikva and later in the vineyards of Rishon LeZion. He became a follower of AD Gordon who preached the "religion of labor". He also served in the Jewish Legion and was involved in the founding of Kibbutz Degania B. Later he served in the Hagana, co-founded the trade union Histadrut on, was director of the Jewish Settlements Department in Berlin and secretary general of the labor council Tel Aviv. At the founding of the state Eshkol was appointed as Director General of the Ministry of Defense. His biggest influence he had as director of the Jewish Agency Settlement Department between 1949 and 1953 and concurrently as Secretary of Agriculture between 1950 and 1952. He organized the mass absorption of immigrants. He was also finance minister between 1952 and 1963. With this background he was slain dyed successor Ben Gurion.
Eshkol sought along with other veterans collaboration with the Achdoet HaAvoda at that time was derived from Mapai. By 1965, the two parties entered into a list connection to the 'Setup'. Both parties did some concessions to their ideology. The biggest concession was done by Mapai there was abandoned further attempts to undermine the 'constitutional' basis of the smaller parties work. Lavon and his associates were involved in the active party work to ensure that Ben Gurion criticism would express the 'Setup'. But it happened anyway. For the first time he opposed openly against Eshkol and Block by requiring the Supreme Court to open an investigation into the handling of the Lavon Affair and by criticizing Mapai who had left the constituency elections. But Eshkol and the Bloc held against it. Dayan then stepped out of the cabinet and Peres and Almogi were put out because they were supported by Ben Gurion.
In February 1965 at the annual conference of Mapai in Tel Aviv gave the party the final agreement on the 'Setup'. Ben-Gurion and his followers founded the Rafi party that saw itself as a trendsetter for the modernization of Israel.
1965 of the elections was a fierce battle between Mapai and Rafi-Achdoet HaAvoda. Yet knew the 'Setup' 45 seats to gain and Rafi got only 10. The bond between Mapai and Achdoet HaAvoda was strengthened and the differences were done almost destroyed. Even the odds with Rafi was overcome. In 1968 these three parties formed the Workers' Party. Ben Gurion, in his eighties, re not oppose. Mapam would join later also at the Labor Party.
The Zionist parties were now divided into two or three large parliamentary blocs.