This thesis explores the influence of the Australian Labor Party's (ALP's) national factions on Party policy. The specific emphasis is on policy development during Labor's 1996-2004 period in opposition. Through a total of 88 interviews, predominantly with members of Caucus including Kim Beazley, Simon Crean and Mark Latham, this thesis has been able to examine not only the formal policy development processes but, significantly, also the informal processes within the Party. The thesis begins with an overview of the national factions' organisation and operations in relation to policy development in both the organisational and parliamentary wings. It concentrates on exploring how the informal processes of the faction system dominate the formal Party structures, and demonstrates how the factional elite control these decision-making forums. The thesis then concentrates on analysing in-depth the factional influences on policies developed within the Immigration, Trade and Family and Community Services portfolios. These case studies were selected because they provoked debate, to varying degrees, in the Party. An understanding of how consensus was reached among the diverse perspectives, particularly between the factions, within the Party is critical to exploring the relationship between the national factions and policy development. The case studies cover a range of policy development modes, and therefore provide ample opportunity to explore factional dynamics in relation to policy formulation under different circumstances throughout the 1996-2004 period. This thesis utilises Arend Lijphart's theory of the Politics of Accommodation, which was originally developed to explain inter-party negotiations within the Dutch coalition government during the twentieth century. This theory is relevant to the study of the ALP's modern factions because, similar to the Dutch political system, the faction system operates on the power-sharing principle of proportional representation (PR). By applying Lijphart's theoretical framework, this thesis provides a rigorous and comprehensive analysis of the ALP's factional dynamics in relation to policy. It gives an in-depth analysis of the elite control of the faction system in the domain of policy development. It demonstrates that faction leaders resolve contentious policy issues by negotiating in a 'spirit of accommodation' and when the factions adopt a policy position, the unwritten rules of the 'factional game' are applied to ensure the national factions reach a consensus on Party policy. Given that the national factions compete for power and sometimes pursue a different set of policy objectives, this 'spirit of accommodation' appears to be paradoxical; this palliative application of factional power is arguably in contrast to the general perception of faction politics. Through the presentation and analysis of original primary data this thesis makes a valuable contribution to the study of the ALP and factions in general, significantly advancing existing knowledge.