Holt retained his portfolios in the Fadden Government, which lasted only 40 days before being defeated on a confidence motion in October 1941. After going into opposition, he kept a reasonably low profile for the remainder of the war, except for his membership of the Joint Committee on War Expenditure. He was criticised by some for not re-joining the army, and at the 1943 election was opposed by Brigadier William Cremor, whose campaign was funded by Sydney businessmen (including Keith Murdoch). He lost a significant portion of his primary vote, but suffered only a small swing on the two-party-preferred count. Menzies returned as leader of the UAP in September 1943, and Holt was initially a candidate for the deputy leadership; he withdrew once former prime minister Billy Hughes entered the race. Holt was in favour of the creation of the Liberal Party, but played little role in the practical aspects of its establishment. He became an official member of the new party in February 1945.