Nevertheless, he remained an MK following elections in 1955 and 1959 and returned to the leadership of the Histadrut from 1956 to 1961. Lavon was later absolved of any involvement in the Egyptian bombings. He retired from public life in 1964 after a long-standing discord with Ben-Gurion and died in Tel Aviv in 1976.
During his tenure, Lavon strained relations with the Chief of Staff of the IDF Moshe Dayan by holding important policy meetings without Dayan being present, directly contacting IDF officers without following the established chain of command and attempting to scuttle Israeli purchases of arms from France. The culmination came when Operation Susannah (as the Lavon affair was officially called) was launched when Dayan was out of the country.