The authority of the council was threefold, consisting of permanent powers, powers to be exercised between assembly sessions, and special powers that could be exercised in exceptional circumstances. The permanent powers were exercised by the president, who was by virtue of his position the head of state, and focused primarily on the representation of the republic in international relations. Between sessions of the assembly the Council of State was empowered to oversee the activity of the Council of Ministers, appoint and recall members of the Supreme Court and the commander in chief of the armed forces, supervise the functioning of the Office of the Prosecutor General, and convene standing commissions of the assembly.

The council could also issue decrees having the force of law although, at least technically, these had to be submitted to the next assembly session for ratification. In the event of circumstances that might prevent the assembly from convening, the council was authorized to appoint the Council of Ministers, declare war, order mobilization, proclaim a state of emergency, approve the budget, and prepare economic plans. Gheorghe Gheorghiu-Dej, first secretary of the Romanian Workers' Party, was elected as president of the Council of State. Ion Gheorghe Maurer—who had been chairman of the assembly Presidium, and thus titular head of state, since 1958—became prime minister.

Although the draft constitution prepared by the commission appointed in 1961 was never adopted, it was used as the basis for the work of a second commission named in June 1965. Under the chairmanship of Ceausescu, the commission prepared a new draft and submitted it to the party congress and the Council of State. After being approved by these bodies the Constitution was adopted by the Grand National Assembly on August 20, 1965.

The Constitution of 1965

After the adoption of the first communist constitution in 1948 the country had officially borne the title of a people's republic. With the promulgation of the new Constitution in 1965 the name of the country was changed to the Socialist Republic of Romania (Republica Socialista Romania). In adopting this title, the Romanian leadership was asserting that the country had completed the transition from capitalism and had become a full-fledged socialist state.

Observers of Eastern European politics considered the emphasis placed on national sovereignty and independence in the new Constitution to be significant. Whereas the 1952 Constitution repeatedly stressed the country's close ties to the Soviet Union and the role of the Soviet army in the liberation of Romania during World War II, the 1965 Constitution omits all reference to the Soviet Union. Instead, it refers only to the policy of maintaining friendly and fraternal relations with all socialist states and, in addition, expresses the intention of promoting friendly relations with nonsocialist states.

There is also increased provision for civil liberties in the 1965 Constitution, including the right of petition, the right of individual recourse to the courts in the event of illegal acts of state agencies, and rights equivalent to habeas corpus. The extent of individual freedom is qualified, however, by the declaration that the "freedom of speech, of the press, reunion, meeting and demonstration cannot be used for aims hostile to the socialist system and to the interests of the working people." While proclaiming freedom of association and organization, the 1965 Constitution, as did that of 1952, prohibits associations of a "fascist or anti-democratic character."

Perhaps owing to the declared advancement to the stage of socialism, the 1965 Constitution contains no reference to the "private capitalist sector" of the economy, as had the 1952 document. Whereas the 1952 Constitution had recognized the private sector as one of three elements of the economic system, along with the socialist sector and the sector described as "small-scale commodity production," that of 1965 declares the basis of the economy to rest solely on the socialist ownership of the means of production. Cooperative farmers, however, are permitted the personal ownership of some livestock and tools, certain craftsmen are guaranteed ownership of their workshops, and peasants who are not in cooperatives are able to own small parcels of land and some farm implements.

Changes that had been made in the organizational structure of the government after 1952 were incorporated into the 1965 Constitution. The Council of State is described as the "supreme body of state power with a permanent activity," although it remains theoretically subordinate to the Grand National Assembly, which is designated as "the supreme body of state power." In contrast to the 1952 Constitution, which provided for representation to the Grand National Assembly on the basis of one deputy for every 40,000 persons, the 1965 document fixes the number of assembly deputies at 465 and requires the establishment of that number of constituencies of equal population.

Although the Hungarian Autonomous Region continued to exist, the 1952 provision guaranteeing "administrative and territorial autonomy" to the Hungarian population was omitted from the 1965 Constitution. All of the sixteen regional units were subsequently eliminated by a territorial reorganization of 1968, at which time a system of judete (counties) was established.