In March 1856, Donaldson was elected to the newly created Legislative Assembly of the first Parliament, representing Sydney Hamlets. The first Legislative Assembly had trouble forming a Government. Eventually Governor Denison invited Donaldson to be Premier and he took up the offices of Premier and Colonial Secretary on 6 June 1856. Two months and 20 days later, on 25 August 1856, his Government lost a vote and he resigned. He was criticised for standing down so readily but he said, "my colleagues and myself are all too independent of office to cling to it", a somewhat prophetic remark.