Benedryl will only cover up symptoms, not solve it. Its okay to use for symptom relief, but you have to get to the bottom of the cause. If you have not had it done already, go to a vet and have a skin scraping performmed & examined. This will tell you if it's a bug problem or not. If it is not, it is pretty certain that it is an allergy. Dogs (and people) can be alergic to external things (like detergents, chemicals, pollen and mold) or internal (things they ingest).
My bro has a Bull Terrier, this breed is known as the most allergic breeds on the planet. After a while we discovered that he is allergic to some protiens. He can only eat pork, which is very unusual. To find out what your dog is allergic to, you will have to stop feeding him any prepared dog food. most of these prepared dog foods are made up of the most common allergens for dogs: Corn, Soy, Wheat, and certain chemicals and preservatives. My brother makes his dog food, and since this time, the dog has had no more health problems. Prior to this, the dog was constantly ill and cost him thousands of dollars to treat. I reccomend you buy a book with simple ways to prepare dog food at home. Choose a simple food, made of the things your dog does not react to. Do you know which meats the dog is allergic to? If you do, feed only that for 2 weeks, or until his sympotoms subside. After that, you can add things to his diet on at a time. Usually only one thing a month. If something causes a reaction, put it on his "no" list. Finding out what the dog reacts to can take years. Also, initially your dog may react to everything because his immune system is hyperactive, and sensitive to everything. I will PM you with some book/recipie info.