In this, he served as vice-Prime minister in 1946. In 1950-51 he was Minister for European Relations in the government of the Radical René Pleven, and in 1951 he was Deputy Prime Minister in the government of Henri Queuille. He represented France at the Council of Europe, and was President of the Socialist Group on the Council's Assembly. From 1951 to 1969 he was Vice-President of the Socialist International.
As the crisis escalated, previously secret British cabinet papers show that in September 1956, Mollet requested to merge France and the United Kingdom and again, two weeks later, for France to join the Commonwealth of Nations. Along with the crisis, the French economy was in a mess and the United Kingdom was seen as a social and economic role model in Paris. Both requests were turned down by the British prime minister Anthony Eden, and a year later France signed the Treaty of Rome with Germany and the other founding nations of the Common market.
Eden feared that Nasser intended to cut off oil supplies to Europe. In October 1956 Mollet, Eden and the Israeli Prime Minister, David Ben-Gurion, met in secret and agreed to make a joint attack on Egypt. The Israelis invaded Egypt, and British and French troops occupied the Suez Canal area. But the invasion met with unexpected opposition from the United States, and France and the United Kingdom were forced into a humiliating backdown. Eden resigned, but Mollet survived the crisis, despite fierce criticism from the left.
At first, Mollet's policy was to negotiate with the FLN liberation front. Once in office, however, he changed his mind and argued that the FLN insurgents must be defeated before negotiations could begin. Mollet's visit to Algiers was a stormy one, with almost everyone against him. He was pelted with rotten tomatoes at a demonstration in Algiers on 6 February 1956, a few weeks after becoming prime minister. The French refer to this memorable event as "la journée des tomates".
He poured French troops into Algeria, where they conducted a campaign of counter-terrorism including torture, in particular during the Battle of Algiers which took place from January to October 1957. This was too much for most French, and Mollet's government collapsed in June 1957 on the issue of taxation to pay for the Algerian War. The Secretary of State to Foreign Affairs Alain Savary, also a SFIO member, resigned because of his opposition to Mollet's hard-stance in Algeria.
The idea of a merger of France and Britain was previously proposed by Sir Winston Churchill on 16 June 1940 (the date is important as the German Panzer divisions were then racing through France, and Belgium had surrendered to Hitler a few days previously). It was apparently agreed by de Gaulle as a French defence liaison with Britain, one of whose advisory staff was Jean Monnet, later prime minister and architect of the post war recovery plan for France and then of the Common Market.
When the papers were made public in January 2007, a poll conducted by the BBC with the French public came out with a resounding note of surprise and disbelief. Almost all of the people interviewed contended the union would have been a disaster for France's identity.
Mollet's cabinet was the last government formed by the SFIO (soon divided into PCF and PS), which was in increasing decline, and also the last stable government of the Fourth Republic. The Algiers coup of 1958 led by First Indochina War and Suez Crisis veterans brought Charles de Gaulle to power from retirement and in effect seized power. Mollet supported him on the grounds that France needed a new constitution which would allow the formation of strong governments. De Gaulle appointed him one of four Secretaries of State in his first cabinet. This caused the creation of the PSU, the Unified Socialist Party, formed by the PSA Autonomous Socialist Party and the UGS (Union de la Gauche Socialiste, a split of the SFIO).
During the 1965 presidential campaign, he presented himself again like the attendant of the Socialist identity and opposed to the candidacy of Gaston Defferre, who proposed the constitution of a "Great Federation" with the non-Gaullist center-right. He accepted to support François Mitterrand's candidacy and participated to the center-left coalition called Federation of the Democratic and Socialist Left. But it split three years later.
His leadership over the party was more and more challenged. He could not prevent the designation of Defferre as SFIO candidate at the 1969 presidential election. This one obtained a disastrous result (5%) which swallowed up the SFIO and Mollet too. The party merged with left-wing clubs in a new Socialist Party, which Mollet abandoned the leadership to Alain Savary. However, the internal opposition accused Mollet to be stood the real leader of the party. It allied with François Mitterrand, who joined the party during the Epinay Congress and took the lead in 1971.
Mollet and his followers were ejected in the minority of the party. He mocked the Socialist speeches of Mitterrand: "he is not socialist, he has learned to speak socialist".