Egyptian politics since the 1919 revolution had been described as a three-legged stool: the conservative palace under the king, the liberal Wafd Party led by Mustafa al-Nahhas, and the British. The three legs were rarely in balance. The palace and the British frequently cooperated to contain the Wafd, whose mass popularity threatened both. But the Anglo-Egyptian Treaty of 1936 had reset the relationship, confining British troops to the Suez Canal zone and reducing the British High Commissioner to an ambassador. When King Fuad I died that same year, his young son Farouk inherited a throne hemmed in by British power on one side and Wafdist popularity on the other. The Wafd experienced an internal split in 1937, with Ahmad Maher and Mahmoud el-Nokrashy departing to form the Saadist Party. The 1938 elections were rigged against the Wafd, and Farouk aligned himself with conservative allies, including Ali Maher and the Grand Imam of al-Azhar.

When World War II broke out, Ali Maher was prime minister. He broke off relations with Germany and Italy, confiscated Axis property, and interned German nationals, but he stopped short of declaring war. The British found this insufficient. They were suspicious of the palace's connections to Cairo's Italian community and began planning for Farouk's forcible removal as early as June 1940. A succession of prime ministers followed: Hassan Sabry, who died in office in November 1940, then Hussein Sirri, whom Lampson privately called a stroke of luck. But Sirri had no political base and faced a cost-of-living crisis that the Wafd exploited. The British saw the Wafd's anti-government campaign as palace-sponsored agitation. Each faction maneuvered against the others while Rommel advanced across North Africa.

The crisis broke on February 1, 1942, when Sirri resigned after King Farouk objected to the severing of relations with Vichy France without his consultation. Lampson saw an opening. On February 2, he presented Farouk with four demands, the critical one being that Nahhas be asked to form a government. When Farouk consulted with party leaders, they collectively refused, calling the ultimatum "a great infringement of the Anglo-Egyptian Treaty and of the independence of the country." Lampson and Minister of State Oliver Lyttelton drafted an abdication proclamation. That night, Stone's forces encircled the palace. Lampson entered and placed the abdication document before the 22-year-old king. Farouk was about to sign when his advisor Ahmed Hassanein intervened, speaking to him in Arabic. Farouk asked whether he could still appoint Nahhas. Lampson, later admitting it was "sorely tempting" to insist on abdication, agreed to accept the appointment instead.

The Wafd had built its identity as Egypt's nationalist, anti-British party since the 1919 revolution. Being installed in power by British tanks shattered that image. Nahhas formed his government, but the political cost was catastrophic. The Wafd served from 1942 to 1944, then did not return to power until 1950. The palace was humiliated. Egyptian nationalists across the political spectrum were radicalized. Among the young army officers who watched these events unfold was Muhammad Naguib, who would become Egypt's first president after the 1952 revolution. In his memoirs, Naguib cited the Abdeen Palace incident as a decisive factor in the rise of the revolutionary, anti-monarchical sentiment that eventually brought down the monarchy and ended British influence in Egypt. What Lampson intended as a wartime expedient became a catalyst for the end of the order he was trying to preserve.