My 4 year-old Simon also suffers from a similar skin condition as of late. It started about a year and a half ago when we moved into a new condo. We'd assumed it was because our old home has hard wood with limited wool carpets. Our new place has new carpet almost everywhere. Since he's on a premium allergy formula of Dick Van Patten's Natural Balance dry food, I never thought it could have been the food. Sometimes I give him half a Benlyn to relieve severe itching, but I too am looking for a more long-term but gentle solution - besides reflooring in hardwood if avoidable!
I use an iodine shampoo each week, but I'm not sure of it's effectiveness. We were recently on holiday for 2 weeks and Simon was at my cousin's kennel. He came home with what seemed like nearly completely clear skin, but after a month his skin is showing some bumps and skin scabs. They clear up and leave the dark skin and eventually clear up to his normal pink colour. And the cycle continues.