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To prevent any further escalation and to calm the infuriated masses, Nikita Khrushchev initially decided to order the Soviets to retreat from Budapest. Оn October 28, Nagy announced an immediate and general cease-fire over the radio and, on behalf of the new national government declared that a multi-party system was to replace the communist single-party dictatorship as well as: that the government would assess the uprising not as counter-revolutionary, but as a “great, national and democratic event”; an unconditional general cease-fire and amnesty for those who participated in the uprising; negotiations with the insurgents; the dissolution of the AVH; the establishment of a national guard; the immediate withdrawal of Soviet troops from Budapest and negotiations for the withdrawal of all Soviet forces from Hungary.

The Soviet Union’s new leader Khrushchev had a different approach from Joseph Stalin. He debated the matter of Hungary’s independence in Moscow, even considering negotiating its constant withdrawal of troops. Despite the Politburo and Presidium's initial decision not to remove the new Nagy Hungarian government and to withdraw the Soviet forces from Hungary, only a day later - on 31 October, the Soviet leaders decided to reverse their decision and to strike back. Soviets believed that the rebellion directly threatened the very Communist rule in Hungary. The West would quickly recognize a sign of weakness in Moscow’s lack of response, especially after the British, French, and Israeli strike against Suez that had begun on October 29. Soviets also feared the spread of anti-Communist feelings in Hungary, which also started threatening neighboring satellite leaders' rule. Finally, the Soviet party members would fail to understand any lack of response by force in Hungary. <ref><i>The 1956 Hungarian Revolution: A History in Documents</i> - http://nsarchive.gwu.edu/NSAEBB/NSAEBB76/</ref>

The second Soviet intervention left no one guessing about the oncoming outcome. In the early hours on November 4, the Russians' strongest continental army attacked Budapest and Hungary with over 1 000 tanks, destroying the fierce but uncoordinated resistance of the poorly armed Hungarian freedom fighters. Soviets quickly seized control and occupied all key positions in the city. Nagy made his final broadcast to the world at 05:15 in the morning, appealing for international help. However, Western powers were much more concentrated on the Suez Crisis at the time. Janos Kadar, fully backed by Moscow, proclaimed himself head of a new “Hungarian Revolutionary Worker-Peasant Government.” He declared that Imperialistic western powers were financing this counter-revolution, and he called on Soviet help to put it down and restore order since Nagy’s government was “illegal.”

Recriminations followed with tens of thousands of Hungarians arrested, imprisoned, and deported to the Soviet Union, often without evidence or proper trials. Until mid-1957, many enemies of the communist regime were executed without a trace, and more than 200 000 people fled Hungary - either fearing for their lives or to escape from the Communist regime. Moreover, many of them were Hungary’s best-educated people searching for a better life in the Western world.