In his first electoral test of strength, a half Senate election at the end of 1967, Whitlam performed creditably against Prime Minister Holt although still falling short of winning. A more important pointer to his importance came after the disappearance of Holt in the sea in December; the Liberal Party's choice of John Gorton to succeed him was prompted largely by that party's desire to have an attractive and charismatic figure who could neutralise Labor's Whitlam.
To achieve anything within the party Whitlam knew that there had to be a restructuring of the extra-parliamentary machinery of Conference and Executive. This was already in train in the inquiry directed by Secretary, Cyril Wyndham, but it clearly had to reflect at least some of the Whitlam ideas. The Federal Conference of 1967 was a triumph for the reformists. Included in the reforms was a complete reshaping of Federal Conference itself, giving the four Federal leaders of the House and Senate full membership of the Conference, along with State leaders, and incorporating the Northern Territory and Australian Capital Territory. Conference was now a much larger body, and much less capable of being manipulated by any dominant group on the Executive. The two forces with most influence in future Conferences would be the parliamentary party and the newly professionalised Executive. The Executive itself also had to be reformed, especially following Whitlam's own description of the Chamberlain Executive as the 'twelve witless men'. The four leaders of the Federal Parliamentary Labor Party were given membership, with voting rights, on the Executive.
When Mick Young became Federal Secretary in 1969 Whitlam gained one of his most effective allies in pushing for further reform. Together with Young, one of the most effective proponents of party reform and the Whitlam agenda was another powerful South Australian, Clyde Cameron, who could twist arms in the trade union movement to get support for the changes. Part of the electoral problem lay in Victoria, where an uncompromisingly militant Left faction made the job of the DLP in discrediting Labor as sympathetic to Communists very easy. Whitlam knew that it would be impossible to win office without picking up a significant number of seats in Victoria. Federal intervention in the Victorian Branch in 1970 at least moderated that image.
At the same time Whitlam pressed for changes to long-term policy within the party. The White Australia policy was finally buried. Labor supported the constitutional amendment of 1967 that opened the way for Commonwealth governments to defend the rights and welfare of Aborigines. A good solution to the problem of state aid was the commitment of the party to a 'needs principle' in education, whereby schools would receive government support according to need, and irrespective of whether they were public or private. While opposing the Vietnam War and the system of conscription by ballot, the party accepted the principle of joint US-Australian bases that gave support to the American alliance. Less controversial within the party, but a new direction nonetheless, was Whitlam's promise of a comprehensive health insurance scheme. A major part of policy development was directed at urban reform promising improvements in public transport, hospitals, sewerage and social amenities that amounted to a new vision of the Federal relationship between Commonwealth and States. These policies were directed at the vast suburban sprawls of the major Australian cities, and amounted to a fundamental reorientation of Labor's electoral appeal. Although the term had not yet been invented, one can see a direct appeal to an 'aspirational' class of upwardly mobile young families in the suburban mortgage belts that had not been a traditional Labor support.
The first real test of Whitlam's electoral appeal came in the Federal elections of October 1969. After the debacle of 1966 a Labor victory was always going to be extremely difficult. However, Liberal leader Gorton was losing support both in his own party and in the electorate, while Whitlam was gaining popularity. The coalition campaign was negative, portraying Whitlam as a pawn in the hands of militant unions, while the Labor message was one of social change and disengagement from Vietnam and conscription. Labor outvoted the Coalition parties, and was defeated only by the allocation of DLP preferences. It won 59 of the 125 seats in the House of Representatives, up from the 41 won in1966. Three of the additional seats were in Victoria, although that State was still the main problem area for Labor.
Even after the election there was an appreciation fostered even by sections of the mass media that were traditionally anti-Labor that the national political agenda was being driven by the Labor Party, not by the Coalition. There was confidence in the party that victory was in sight. At a half Senate election in November 1970 Labor won more seats than the Coalition, but the DLP also picked up two seats to give them five Senators and the balance of power in the Senate. For the Liberal Party these developments merely served to increase the pressure on their own leadership, so that Gorton was replaced in 1971 by the colourless William McMahon. Within the Labor Caucus the Chair became an elected position separate from the Leader, and a Caucus committee system was designed to harness the talent of backbenchers to develop a detailed understanding of all policy areas.