In the 1990 election, he stood for Parliament as a candidate for the National Party, defeating Labour's Bill Dillon in the Hamilton East electorate. In the 1993 election, however, he was defeated by Labour's Dianne Yates. He regained the seat in the 1996 election, and retained it in the 1999 election, but in the 2002 election, he was defeated again by Dianne Yates. Having opted not to seek a position on National's party list, Steel left Parliament. Testament to Steel's popularity in the city of Hamilton is the fact that he lost what has traditionally been regarded as a bellwether seat by a mere 600 votes, in an election where the National Party was almost destroyed by its lowest polling result in recent history.[citation needed]
In 2000, an extra house was added at Hamilton Boys' High School, named Steel house, after Tony Steel. Apart from Argyle House (the boarding house), all of the other houses are also named after former Headmasters.
Tony Steel also won the New Zealand 100/200metres Sprint double at the 1965-66 New Zealand Track and Field Championships representing Canterbury as well as being a member of the winning Canterbury 4x100 metres Team that took Gold