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A revival in the latter half of the 1987 – 88 campaign lifted Caernarfon up to third place and they also reached the semi-final of the Welsh Cup before losing out ( on a 2 – 1 aggregate ) to.
In 1989 – 90, Caernarfon were relegated to the NPL's first division and, following a series of mediocre performances over a five-year period, the club's board of directors decided to return to Welsh football.
Thus, Caernarfon were welcomed into the League of Wales in August 1995.
The 1995 – 96 season was very successful with Caernarfon achieving sixth place in the league table and reaching the semi-finals of both the League of Wales League Cup and the North Wales Coast F. A.
Cup.
That led to an even more enjoyable 1996 – 97 season when the Canaries challenged for the league title before finishing fourth, just behind on goal difference and missing out on a place in Europe.
The Canaries also progressed to the final of the North Wales Coast F. A.
Cup before going down 2 – 1 to Porthmadog.
Eifion Williams, the club's leading goalscorer, twice won international recognition for Wales at under-21 level and earned Caernarfon a reported £ 25, 000 when transferred to champions Barry Town in 1997.
1997 – 98 proved to be a difficult campaign marked by the failure to replace Eifion Williams in attack.
The club languished at the wrong end of the table for most of the season, before pulling clear of relegation.

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