The exodus confronted the Yishuv with a major problem: Whether or not to allow those who had fled or been expelled to return. Already during the spring, refugees in various localities began pressing to return. Local Haganah and civic leaders had to decide, without having national guidelines, whether to allow this – and almost invariably ruled against. In May, the Arab states, led by Jordan, began clamouring for a refugee return. From early summer, the Yishuv's leaders came under intense international pressure – spearheaded first by Count Folke Bernadotte, the Swedish United Nations Mediator for Palestine, and later by the United States – to repatriate the refugees. At the same time, the government was subjected to lobbying by army and local authorities in various parts of the country to bar a refugee return. In mid-June the Cabinet discussed the matter and a consensus emerged to prevent a return, at least so long as the hostilities continued. The consensus turned into a formal Cabinet decision in July. Without doubt, this was one of the most important decisions taken by the new State in its first formative months.

The decision, taken against the backdrop of the pan-Arab invasion and the intensification of the fighting, had crystallised over April–June. Already in early April, as the Haganah switched to the offensive, local commanders and Arab affairs advisers in predominantly Jewish areas decided to bar a return to their areas.