Singapore gained self-government in 1959. In the first General Election, the People's Action Party (PAP) won 43 out of 51 seats, and Lee Kuan Yew became Singapore's first Prime Minister. The next few years saw an intense struggle within the party as leftist elements tried to seize control of it from the moderates, led by Lee. Externally, the PAP faced a threat from the Malayan Communist Party. Even as this dual struggle — one within the PAP and one outside it — was on, Malayan Prime Minister Tunku Abdul Rahman, speaking on 27 May 1961, proposed merger between the Federation of Malaya, Singapore, Sarawak, North Borneo and Brunei. The PAP favoured Singapore's independence through merger with the Federation, but the pro-Communists within the party opposed merger because “communist subversion, disguised for the moment as an anti-colonial struggle, would not only lose its raison d'etre but also become vulnerable to suppression by the anti-communist national government in Kuala Lumpur controlling internal security.”

In July 1961, the PAP narrowly survived a vote of confidence in the Legislative Assembly when 27 members voted for the government and 24, including 13 of the PAP's left-wing members, either abstained from voting or voted against the motion of confidence. The thirteen PAP assemblymen were expelled from the party and, led by Lee Siew Choh and Lim Chin Siong, went on to form the opposition Barisan Sosialis (Socialist Front) in August 1961. A referendum on the terms of the merger held in Singapore on 1 September 1962 saw overwhelming support for it.

Singapore declared independence, even before the formation of Malaysia, on 31 August 1963. The Federation of Malaysia, consisting of Malaya, Singapore, Sarawak and North Borneo (renamed Sabah), was formed soon after, on 16 September 1963. Brunei stayed out. Indonesia, which considered Malaysia to be a neo-colonial plot directed against it, responded violently in January 1963. It declared “Confrontation”, a policy of armed infiltration, subversion and sabotage — hostilities short of all-out war — against Malaya and Singapore to prevent the formation of Malaysia and, later, to undermine the Federation.