The problem is usually one of constantly feeling itchy, not psychological as some people suspect. There is no easy answer to this. It might well be an allergy. If it is, it might be to a food item, might be to flea bites, might be to allergens in the environment such as inhaled pollens and dusts, or it might be a contact allergy with something in grass or your carpets etc. Deciding which is relevant to your dog is not at all easy. To complicate things, skin overgrowths of yeasts or bacteria can invade allergy-affected-skins and worsen the itching.
This is more a problem for your vets to sort out rather than by email, but a good start is indeed a restricted, hypo-allergenic diet. There is no cheap one, and it has to be maintained to the exclusion of all else (no other tit-bits or scavenging)for at lest 6 weeks. If the itching is reduced, then diet probably plays a part, but there might well be other factors involved too.
My general advice would be rigorous flea control even if you never see fleas (using eg Frontline), a suitable diet such as Purina DRM, an oil supplement such as Efavet and using Coatex Medicated Shampoo. If in any doubt you really need to see your own vet.
Sunday 20th January 2013