The grand revolt led to a change in the leadership of the Greek government-in-exile. Georgios Papandreou, who had strong republican and anticommunist credentials, was appointed prime minister of a government of national unity organized in Lebanon. The purpose of the appointment was to attract noncommunist antimonarchists away from EAM to a staunchly anticommunist, pro-British government. In August 1944, after initially rejecting the minor posts allotted to it in the Papandreou government, EAM bowed to Soviet pressure and accepted the terms of the Lebanon agreement. The Germans began to withdraw from Greece in October. Although ELAS's control of the Greek countryside would have made a grab for power easy, in this period resistance forces confined their activities to harassing the German withdrawal.

Papandreou and the national government entered Athens on October 18. The euphoria of liberation swept all before it, and for days the streets were filled with rejoicing citizens. Beyond their joy, however, fear and mistrust abounded, and many key issues remained unresolved. As before the war, the constitutional schism still divided Greeks.

The Lebanon agreement called for the 60,000 armed men and women of ELAS, with the exception of one elite unit, to lay down their arms in December, with the aim of creating a new national force based on the MEAF. In late November, however, Papandreou demanded total demobilization of ELAS, a step the resistance leadership would not take. The leftist factions were already quite suspicious of the failure of Papandreou and the British to actively pursue and punish Greek collaborators, many of whom the Nazis had recruited by citing the threat of a communist takeover. By December, amid rising tension and suspicion on both sides, EAM called a mass rally and a general strike to protest the government's high-handedness. When police forces opened fire on demonstrators in Athens, a thirtythree -day street battle erupted between police and British troops on one side and ELAS fighters on the other. Although EAM was not prepared to seize power and fighting did not spread outside Athens, the potential for wider hostilities was clear. The Battle of Athens ruined some parts of the city and left as many as 11,000 dead.

When Churchill visited Greece to assess the situation, he became convinced that the constitutional issue had to be resolved as expeditiously as possible. Under strong British pressure to improve his image with the Greek people, King George agreed to the appointment of the widely respected Archbishop Damaskinos of Athens as his regent in Greece. In a concession to the opposition, Papandreou was replaced as prime minister by the old Liberal General Plastiras.

In February 1945, a semblance of peace was restored with the Varkiza Agreement, under which most ELAS troops turned over their weapons in exchange for broad political amnesty, a guarantee of free speech, the lifting of martial law, amnesty for all "political crimes," and the calling of plebiscite on the constitutional question. The Varkiza Agreement initiated what became known on the political left as the White Terror. Rather than prosecuting collaborators, the Ministry of Justice and the security apparatus, together with vigilante bands of anticommunists, ignored the political amnesty for the next two years, continuing the struggle of the collaborationist security service against resistance figures with known leftist connections. But now the latter had little public support, as most of Greek society went on an anticommunist crusade against which the KKE, forsaken by Stalin, could do little. Wartime heroes were executed for killing collaborators, and judges and tax collectors of the PEEA went to jail for unauthorized representation of the Greek government. Right-wing death squads and paramilitary groups embarked on a campaign of terror and assassination against leftists. Both communist and noncommunist EAM/ELAS members went underground for their own safety. A series of weak governments proved incapable of stemming the escalating sectarian violence.