In 1903 Queensland's long-running Continuous Ministry fell and was replaced by a coalition of liberals and Labor, headed by Arthur Morgan and including two Labor members, though not the party leaders. In 1906 Morgan was succeeded as Premier by William Kidston, one of the Labor members. However Kidston grew increasingly dissatisfied with the official direction of the party as set by the 1905 party convention on the issues of collective ownership and Crown land sales, which he felt to be impractical and electorally unrealistic. The 1906 federal election saw Labor do badly in Queensland at the hands of the Anti-Socialist Party, confirming Kidston's views as conflict grew between pursuing an efficient reformist government and the orthodox pursuit of Labor's interests and ideology. Kidston demanded greater loyalty to himself but the 1907 party convention reaffirmed the socialist objective, resulting in a split. All but fourteen members of the parliamentary party rallied to Kidston's banner and in the 1907 state election the Kidstonites won twenty-four seats. With both Labor and Robert Philp's Conservative group having near similar numbers a three party system operated in the state over the next two years with none able to govern alone. Kidston secured some support from Labor on common issues, but the Queensland Legislative Council obstructed much legislation. Kidston tried to appoint more supportive members to the council but the Governor of QueenslandLord Chelmsford refused, leading to Kidston's resignation. Philp formed a government which was promptly denied supply and forced to a new election in February 1908 at which the balance in the parliament was barely altered. Kidston resumed office and, with the support of Labor, passed reforms including Parliamentary Bills Referendum Act which allowed for bills blocked repeatedly in the Council to be submitted to a referendum. Other legislation passed included pensions, wages boards and electoral reform, but the alliance with Labor came to an end and other bills passed such as private railway construction instead relied on the support of Philp's Conservatives. Increasingly the Kidstonites and the Conservatives were drawn together and in October 1908 they merged. However not all of the Kidstonite MLAs accepted the merger with a group called the "Independent Opposition" emerged, headed by former Attorney GeneralJames Blair and including former Labor leaders Peter Airey and George Kerr. The fused party revived the name Liberals.
