Some political commentators hold that it was in the wake of the 1956 elections that two completely separate and basically hostile political systems emerged in Sri Lanka: one for the Sinhalese and another for the Tamils. The trend toward Tamil exclusivity, however, despite periods of accommodation with Sinhalese political parties, had begun developing before independence. The first political organization to be formed specifically to protect the welfare of an ethnic minority was the All Ceylon Tamil Congress (ACTC), which G.G. Ponnambalam founded in 1944. The Tamil Congress attempted to secure adequate constitutional safeguards before the country attained its independence. These attempts reflected Tamil anxieties that British domination would simply give way to domination by the Sinhalese majority.

After independence, a dissident Tamil group in the ACTC emerged under the leadership of S.J.V. Chelvanayakam. The new group disagreed with Ponnambalam's policy of collaboration with the intercommunal, but Sinhalese-dominated, UNP. In 1949 the dissidents broke away from the ACTC and formed the rival Federal Party, which proposed establishing an autonomous Tamil linguistic state within a federal union of Sri Lanka. The Federal Party regarded this alternative as the only practical way to preserve Tamil identity.

In 1956 the Federal Party emerged as the dominant Tamil political group as a result of its convincing victory over the conservative Tamil Congress. The Federal Party had a distinct advantage because the Tamil Congress had suffered considerably from the stigma of its association with the UNP (which had abandoned its policy of making both Sinhala and Tamil national languages in an attempt to obtain the support of the numerically greater Sinhalese vote).

The Federal Party continued to consolidate its strength and became an important player in national politics. In 1965 the party became a component of the UNP-led coalition government by committing its bloc of parliamentary seats to the UNP, which at that time needed the Federal Party's support to form a stable parliamentary majority. In 1968 however, the Federal Party withdrew from the UNP government because its leaders were convinced that the party could no longer derive any tangible benefits from further association with the UNP. In 1970 the Federal Party campaigned independently, unlike the Tamil Congress, whose leaders called on the Tamils to join a united front with the Sinhalese.

Data as of October 1988