This was remembered as PAP's most bitterly fought GE in history and was held over the period of Singapore's entry into Malaysia. After two by-election defeats and two defections to UPP, PAP expelled 13 of its Assembly Members who mutinied in a no-confidence motion on 20 July 1961 and was hanging onto a slim one-seat majority of 26 to the opposition's 25. The dissidents formed a new party, BS, which PAP alleged was a communist front. On 3 July 1962, with the National Referendum on everyone's minds, AM Hoe Puay Choo resigned from PAP. On 11 August 1962, she joined BS. Five days later, UPP AM S. V. Lingam returned to PAP but after another five days, Minister Ahmad Ibrahim passed away from liver cancer, leaving a 25 to 25 stand-off in the legislature. BS intended to field its iconic leader Lim Chin Siong in the seat vacated by Ahmad in a by-election but Prime Minister Lee Kuan Yew decided not to hold one. Instead, he chose to call a GE to court a fresh mandate and if PAP did not win, the Malaysian authorities could deal with a pro-communist ruling BS. Nevertheless, the PAP government launched Operation Coldstore on 2 February 1963 to deal the first blow to its main opponent and detained several BS leaders, including Lim. Sole WP AM David Marshall resigned from the party he founded and became independent. On nomination day, PAP again fielded a full slate and was challenged by three camps also with enough candidates to run for power. BS and its partner PR covered all except two seats. UPP surprised with an unexpectedly large slate and SA, a formalised umbrella of SPA, UMNO, MCA and MIC, was endorsed by Malaysia's ruling Alliance Party coalition. SPA provided two-thirds of SA's candidates but former Chief Minister Lim Yew Hock sat out. The outcome of the GE would also determine the distribution of 15 Singapore seats in Malaysia's Parliament. In the end, PAP emerged victorious with a two-thirds majority and captured all wards won by SA in 1959. All except in three constituencies saw a record of 92 candidates forfeit their deposits. The presence of independent legislators came to an end. Based on the results, PAP was allocated 12 out of 15 seats in the Federal Parliament and BS three. Two ministers who lost their seats, Kenneth Byrne and Tan Kia Gan, were later appointed chairmen of the Central Provident Fund and Housing and Development Board respectively. SA AM A. P. Rajah, who was also defeated, was brought back into the LA as Speaker and served for two years until 1966. To deter defections henceforth, the PAP government swiftly passed a law stipulating that legislators will lose their seats if they resign or are expelled from the parties that they were elected under. In 1964, PAP contested in the Malaysia GE. Despite winning only one seat in the Peninsular, PAP's move escalated its differences with the ruling AP of Malaysia.

Old Assembly dissolution: 3 September 1963 [Tue]
Nomination day: 12 September 1963 [Thu]
Polling day: 21 September 1963 [Sat]
New Assembly convention: 22 October 1963 [Tue]

Electorate: 617,650
Voter turnout: 587,433 (95.1%)

Election deposit: $500

Aljunied Geylang Serai Moulmein Southern Islands
Anson Geylang West Mountbatten Stamford
Bras Basah Havelock Nee Soon Tampines
Bukit Merah Hong Lim Pasir Panjang Tanglin
Bukit Panjang Jalan Besar Paya Lebar Tanjong Pagar
Bukit Timah Jalan Kayu Punggol Telok Ayer
Cairnhill Joo Chiat Queenstown Telok Blangah
Changi Jurong River Valley Thomson
Chua Chu Kang Kallang Rochore Tiong Bahru
Crawford Kampong Glam Sembawang Toa Payoh
Delta Kampong Kapor Sepoy Lines Ulu Pandan
Farrer Park Kampong Kembangan Serangoon Gardens Upper Serangoon
Geylang East Kreta Ayer Siglap
Total seats = 51