Shas resulted in 1984 from allegations of Agudat Israel's inadequate representation of ultra-Orthodox Sephardim in the Council of Torah Sages, the party organization, and educational and social welfare institutions. The leader of Shas was Rabbi Yitzhak Peretz, who served as minister of interior in the National Unity ÍÍÍÍGovernment until his protest resignation in 1987. As a theocratic party, Shas depended heavily for policy direction on its patrons, former Sephardic Chief Rabbi Ovadia Yoseph, and Rabbi Eliezer Shakh, former Ashkenazi head of the Agudat Israel-dominated Council of Torah Sages. Rabbi Shakh sanctioned the formation of Shas and its division into separate Sephardi and Ashkenazi factions. In the negotiations to form the National Unity Government in 1984, Shas outmaneuvered the NRP and gained the Ministry of Interior portfolio. As minister of interior, Rabbi Peretz became a source of controversy as a result of his promoting religious fundamentalism in general and the narrow partisan interests of Shas in particular.

Unlike Agudat Israel, Shas saw no contradiction between its religious beliefs and Zionism. It was far more anti-Arab than Agudat Israel and sought increased representation for its adherents in all government bodies, in Zionist institutions, and in the Jewish Agency. Despite its ethnic homogeneity, Shas was not immune from bitter infighting over the spoils of office, as shown by the rivalry between factions led by Rabbi Peretz and Rabbi Arieh Dari, leader of the party's apparatus, who remained director general of the Ministry of Interior until the National Unity Government's term ended in 1988. Shas gained four Knesset seats in the 1984 elections and increased the size of its delegation to six in 1988. In late 1988, it actually held eight Knesset seats when combined with the two seats gained by Degel HaTorah, a Shas Ashkenazi faction formed in 1988.

Data as of December 1988