In 1929, Lyons resigned from state parliament to enter federal politics, winning the seat of Wilmot in Labor's landslide victory at the 1929 election.

In 1930, he was acting treasurer while Scullin was overseas, and came into conflict with the Labor caucus over the government's response to the Great Depression; he preferred orthodox financial policies.

Initially an indentured labourer, he became a tenant farmer after completing his term of service,[3] and eventually saved enough to purchase land at Stanley, on the north-west coast.

[10] Apart from a three-month stint as a relief teacher at Irishtown, he remained at Stanley until early 1901, when he was given charge of two small "half-time" schools on the east coast, Apslawn and Apsley Meadows.

[15][16] He was then posted to Launceston, teaching at the Glen Dhu and Wellington Square State Schools, as well as briefly acting as headmaster at Perth.

[25] He was somewhat inexperienced with economic matters, and often turned to his friend and colleague Lyndhurst Giblin for advice; they eventually renewed their relationship at federal level during the 1930s.

The government faced a number of challenges during its two years in office, including a statewide drought, a series of bushfires in early 1915, and labour shortages due to the ongoing war.

[29] When the ALP split over conscription during the First World War in 1916, Earle, a pro-conscriptionist, followed Prime Minister Billy Hughes out of the Labor party.

[30][25] As premier, Lyons faced a constitutional crisis relating to the powers of the Tasmanian Legislative Council (the parliament's upper house).

Lyons announced his plan for recovery in October 1930, insisting on the need to maintain a balanced budget and cut public spending and salaries, although also advising lower interest rates and the provision of greater credit for industry.

[25] His conservative economic approach won him support among business, but angered many in the Labor caucus, who wanted to expand the deficit to stimulate the economy, and were horrified at the prospect of cuts in salaries and government spending.

Alienated by their attacks, Lyons began to consider suggestions from a group of his new business supporters, including influential members of the Melbourne Establishment, that he leave the government to take over the leadership of the conservative opposition.

[34] Accompanied by another senior minister in the Scullin government, James Fenton, and four other right-wing Labor MPs, he crossed the floor to sit on the opposition benches.

The UAP realised that Lyons, an affable family man with the common touch, was a far more electorally appealing figure than the aloof Latham.

[33] At the 1931 election Lyons and the UAP offered stable, orthodox financial policies in response to what they branded as Scullin's poor stewardship of the economy.

While Labor remained split between the official party and the Langites, the UAP projected an image of putting national unity above class conflict.

After the UAP suffered an eight-seat swing in the 1934 election, Lyons was forced to invite the Country Party into his government in a full coalition, with Earle Page as Deputy Prime Minister.

The government won a third term at the 1937 election, with 44 of 74 seats and 50.6 percent of the two-party-preferred vote against a reunited Labor Party led by John Curtin.

[25] Lyons adhered to the principles of "sound finance", opposing inflation and government debt and stressing the importance of balanced budgets and orderly loan repayments.

[45] Other legislative accomplishments of the Lyons government include the creation of the Australian Broadcasting Commission (ABC) in 1932 and the Income Tax Assessment Act 1936.

Increases in Australia's defence budget in the years before World War II made him "the greatest peace-time rearmer in Australian history", and saw the military rebuilt after severe funding cuts during the Great Depression.

The appeasement aspect of his foreign policy was primarily directed at Italy and Japan, as it was likely that war between those countries and other major powers would affect the important trade routes in the Mediterranean and the Pacific upon which Australia relied.

He and the other Dominion leaders were only officially informed of the king's intention to abdicate a few weeks before it occurred, although he had found out about the situation earlier through unofficial channels.

Lyons strongly opposed the proposed marriage to Wallis Simpson, a view shared by his cabinet; it is unclear if he was initially aware how deep the king's feelings were.

[57] There was also support for figures outside parliament, including former prime minister Stanley Bruce and Bertram Stevens, premier of New South Wales.

[56][58] By 1938, Lyons was making concrete plans to retire, renovating his house in Devonport and moving his youngest children away from Canberra to attend local schools.

According to Laurie Fitzhardinge, Lyons's death "removed the only force that had held in check the smouldering animosities and barely suppressed rivalries which divided [the UAP's] members".

[66] The couple had twelve children together: Several years after Lyons's death, his widow Enid also embarked on a political career, becoming the first woman elected to the House of Representatives and serving in cabinet in the post-war Menzies Government.

[67] Their sons Kevin and Brendan entered Tasmanian politics, becoming state government ministers several decades after their father's death.

He broke off their relationship for reasons unknown, but they remained firm friends; Bailey never married and kept the love letters they exchanged for the rest of her life.