In 1778 Palliser was appointed to the Channel Fleet under Admiral Augustus Keppel. On 27 July 1778 in the First Battle of Ushant, the Channel Fleet fought an inconclusive battle with the French fleet. The battle's outcome led to personal acrimony between Palliser and Keppel, resulted in their individual courts martial and increased divisiveness in the Navy. Palliser was forced to resign from Parliament and his other posts.