The origins of the Coalition date back to the 1922 federal election, when the Nationalist Party, the main middle-class non-Labor party of the time, lost the absolute majority it had held since its formation in 1917. The Nationalists could only stay in office with the support of the two-year-old Country Party. It soon became apparent that a confidence and supply agreement would not be enough to keep the Nationalists in office.
However, Country Party leader Earle Page had never trusted the Nationalist Prime Minister, Billy Hughes. Indeed, the Country Party had been formed in part due to discontent with Hughes' rural policy. Page not only let it be known that he would not serve under Hughes, but demanded Hughes' resignation before he would even consider coalition talks. Hughes resigned, and Page then entered negotiations with the new Nationalist leader, Stanley Bruce. The Country Party's terms were unusually stiff for a prospective junior partner in a Westminster system (and especially so for a relatively new party)--five seats in an 11-member cabinet, as well as the Treasurer's post and second rank in the ministry for Page. Nonetheless, Bruce agreed rather than force a new election. Since then, the leader of the Country Party, which evolved into the National Party, has ranked second in nearly all non-Labor governments, a status formalised in 1967 when the post of Deputy Prime Minister was formally created to denote Country leader John McEwen's status as the number-two man in the government.
The Nationalist–Country Coalition was reelected twice, and continued in office until its defeat in 1929.
The Country Party and the Nationalists' successor party, the United Australia Party, fought the 1931 federal election with a joint Senate ticket, though they ran separate House tickets. The UAP came up only four seats short of a majority in its own right. The Emergency Committee of South Australia, which stood for the UAP and Country Party in South Australia, joined the UAP party room, giving the UAP enough support to rule alone. However, the parties once again joined in a full Coalition government following the 1934 federal election.
After the death of Prime Minister Joseph Lyons in April 1939, Page was appointed as his successor on an interim basis, pending the new election of a new UAP leader. Despite Page's misgivings, the UAP elected Robert Menzies – who was known to dislike the Country Party. Page subsequently made a vitriolic speech in parliament attacking Menzies's character, and withdrew his party from the coalition – the most recent occasion on which the coalition has been broken while in government. However, a number of Page's colleagues disagreed with his stance, and he resigned as leader in September 1939. He was replaced by Archie Cameron, and after months of negotiations the coalition was revived in March 1940, with five Country MPs joining the second Menzies Ministry.
After losing eight seats at the 1940 federal election, the Coalition was plunged into minority government for the first and only time in its history. Archie Cameron was an immediate victim of the election result, being replaced by Arthur Fadden and later defecting to the UAP. Menzies increasingly struggled to balance his management of Australia's war effort with domestic concerns, and his party began to rebel against him. However, the UAP was bereft of leadership despite having been in power for a decade. With this in mind, in August 1941 the Coalition collectively decided that Fadden and Menzies should swap positions, with Menzies becoming Minister for Defence Co-ordination and Fadden becoming prime minister. It was the first and only occasion on which the Coalition was led by the leader of the junior party. However, the Fadden Government only lasted a few months before losing a confidence motion and being replaced by the Labor Party in the form of the Curtin Government.
After the demise of the Fadden Government, the Coalition voted to continue on under his leadership in opposition. Menzies had opposed this, and resigned as UAP leader, to be replaced by the ageing Billy Hughes. Up until the 1943 election, the Coalition effectively operated as a single unit, with separate party meetings being extremely rare. However, the landslide defeat it suffered – under Fadden as opposition leader – led to an immediate change in strategy. The UAP voted to break off its ties with the Country Party in opposition, and re-elected Menzies as its leader. This is the most recent occasion on which the senior partner in the Coalition has adopted to withdraw.
The UAP was folded into the Liberal Party in 1945, with Menzies as leader. In the lead-up to the 1946 federal election, Menzies renewed the Coalition with the Country Party, which was still led by Fadden. They won the 1949 federal election as a Coalition, and stayed in office for a record 23 years. Since 1946, the Coalition has remained intact with two exceptions, both in opposition. The parties decided not to form a coalition opposition following their defeat in 1972, but went into the 1974 federal election as a Coalition. The Coalition remained together upon entering opposition in 1983 federal election. The Coalition suffered another break, related to the "Joh for Canberra" campaign, from April to August 1987, the rift healing after the 1987 federal election.
The solidity of the Coalition is so strong that when the Liberals won parliamentary majorities in their own right in the 1975, 1977 and 1996 federal elections, the Coalition was retained.