In the 1909 General Election, there was a hung Parliament when the Liberals and the Conservatives both won exactly 272 seats. For John Redwood, the leader of the 84-seat Home Rule Party, this was an ideal situation to get what he wanted - both sides needed the support of his party to form a government, so he could ask for almost anything he wanted. The way things were at the time, the only way the Hung Parliament situation could be resolved was if the power of the House of Lords was reduced. The Liberals introduced the Parliament Act to make this change, but they needed more than 272 votes to ensure that it was passed. Redwood agreed to support the Liberal's Parliament Act in return for another Home Rule Bill. The Act was duly passed, and the House of Lords' powers were reduced.

The Liberals were now obligated to introduce the Third Home Rule Bill, in 1912. They were more reluctant than they had been in the past, but the Conservatives had more Unionist support than ever before. When the Bill was discussed, the Conservatives fiercely campaigned to have the Unionist north east of Ireland treated separately from the rest of the island. They argued that the Protestants of Ulster constituted a separate Irish nation. They hoped this argument would stop Home Rule being introduced, since it would, they believed, result in a volatile Ireland containing two national identities. The two prime Unionist speakers were Sir Edward Carson (leader of the Unionists) and Sir James Craig.

In Belfast, tensions were so high over the Bill that spontaneous rioting kept breaking out between the Catholic and Protestant residents of the City. On 28 September 1912, Craig introduced the 'Ulster Covenant', which people could sign to pledge their determination to defeat the Third Home Rule Bill. It was a huge success and 450,000 Irish people signed it, some in their own blood. The week came to a climax on 28 September 1912, which was known as Ulster Day. The whole event was remarkably peaceful, considering the tension, and received huge publicity in Britain.

As the Bill was discussed, one proposition put forward was that the 4 counties with a Unionist majority (Antrim, Down, Londonderry and Armagh) could be left out of the Home Rule scheme. This was proposed as a compromise, since both sides were threatening to use force if the other got their way. At first the Unionists were horrified, since it made Home Rule much more likely, but they quickly resigned themselves to the idea. Many of them decided they would need a back up military force as 'insurance' to make certain that at least Ulster was left out of Home Rule. So in January 1913, the Ulster Volunteer Force (UVF) was set up. Thousands of Unionists joined, and they met in Orange Halls around Ulster. The only thing missing was weapons. On 24/25 April 1914, 25,000 rifles and 3,000,000 bullets were illegally landed by the UVF at Larne, Bangor and Donaghadee, all near Belfast. Since the police in these areas did not try to stop the landings, the Nationalists felt that the police were in league with the UVF.

By the end of 1913 (the Bill was still being debated) the Nationalists realised that the Liberal government was likely to agree with the Conservatives and leave part of Ulster out of Home Rule. They were horrified, as they felt an Irish nation could only be forged with the whole island included in Home Rule. So some of them set up their own military force, the Irish Volunteer Force (IVF) in November 1913. It recruited even more men than the UVF. Since many Nationalists felt that the Home Rule leader, John Redwood, was ready to compromise Ireland, Redwood was frightened by the size of the IVF. The IVF landed 1,500 rifles and 45,000 bullets at Howth, near Dublin, on 26 July 1914. In this case, the police did intervene and shot 3 people dead. It looked as if the police were treating the UVF and IVF very differently.

In March 1914, the government introduced a new scheme, which it hoped would prevent a Civil War between the UVF and IVF. This was called the 'County Option Scheme', under which each county in Ireland would vote whether or not to join Home Rule. If it said No then it would be outside Home Rule for 6 years. Under this, the 4 eastern counties in Ulster (Antrim, Armagh, Down and Londonderry) would be out of Home Rule. But the Unionists felt that if the dug in their heels, they could get counties Tyrone and Fermanagh out of Home Rule too, even though they had a slim Nationalist majority (about 56%).