He served in the Knesset between 1951 and 1959, and again from 1961 until 1972, first as a member of Maki, before breaking away from the party with Tawfik Toubi and Meir Vilner to found Rakah.

"Habibi became one of the most popular authors in the Middle East as a result of works depicting the conflicts in loyalties experienced by Palestinians living as an Arab minority in the Jewish state of Israel.

In such works as Strange Events in the Disappearance of Said Abu al-Nahs al-Mutashael (1974), the most notable of his seven novels, he explored the duality of those Arabs who, like himself, did not leave their homeland during the 1948–49 Arab-Israeli war.

In 1972 he resigned from the Knesset in order to write his first novel: The Secret Life of Saeed the Pessoptimist, which became a classic in modern Arabic literature.

In it he has a character state: "There is no difference between Christian and Muslim: we are all Palestinian in our predicament"[6]In 1990, Habibi received the Al-Quds Prize from the PLO.

[9] 1969: Sudāsiyyat al-ayyām al-sittah 1974: Al-Waqāʾiʿ al-gharībah fī 'khtifāʾ Saʿīd Abī 'l-Naḥsh al-Mutashāʾil (translated as The Secret Life of Saeed the Pessoptimist)[10] 1976: Kafr Qāsim (Kafr Kassem) 1980: Lakʿ bin Lakʿ (play) 1991: Khurāfiyyat Sarāyā Bint al-Ghūl (translated as Saraya, the Ogre's Daughter)