[4] In 1994 Allison contested the state by-election for the Victorian Legislative Assembly district of Williamstown after the resignation of Joan Kirner, the former Premier of Victoria.

Between 1998 and 2006, Allison served on the Legislation and References Committees for Environment, Recreation (later Information Technology), Communications and the Arts; and for Community Affairs.

She served as Senate Select for Superannuation (1996–98); the Victorian Casino Inquiry (1996); the Lucas Heights Reactor (2000); Medicare (2003–04); and Mental Health (2005).

In August 2002 Allison, along with fellow senators Aden Ridgeway, John Cherry, and Andrew Murray, succeeded in forcing Natasha Stott Despoja to resign from leadership.

[10][11] During the 2007 election campaign, Allison announced a national preference deal with the Greens[12] to increase the chance of a progressive party taking the balance of power in the Senate.

Allison joined Bob Brown and Kate Lundy in a joint political advertisement sponsored by GetUp!

[13] Allison received the support of community and interest groups such as the Asylum Seeker Resource Centre, for her support for refugees and asylum seekers;[14] the Friends of the ABC, for promoting public broadcasting;[15] and endorsements by prominent women and feminists such as Barbara Spalding and Anne Summers.

Allison's term expired on 30 June 2008, leaving the Australian Democrats with no federal representation for the first time since its founding in 1977.