Troops were moved from near Cairo and from the canal zone to Mersa Matruh, 170 mi (270 km) west of Alexandria in the Western Desert, to be in a position to protect Egypt from an Italian invasion from their Libyan colony. Relations quickly deteriorated and British reinforcements were dispatched to Egypt. The Anglo-Egyptian treaty of 1936 followed, before tensions simmered with a joint declaration, on 2 January 1937, by Italy and Britain to maintain the status quo around the Mediterranean. In 1935, British policy shifted to view Italy as the principle threat towards British interests in the Middle East, due to their colonial ambitions as well as their military build-up and the Second Italo-Ethiopian War.

During the inter-war period, the Middle East and the canal gained further importance as oil production expanded and as aerial links between Britain and British India were developed. To maintain this, Egypt was occupied in 1882 and a protectorate was subsequently established. It also held economic and prestigious importance. The Suez Canal in Egypt, was seen as a vital link of the British Empire connecting Britain with its colonial possessions in the Far East, especially British India. Significant formations that the army controlled included the British V, X, XIII, and XXX Corps, as well as the I Canadian Corps and the II Polish Corps. Throughout its campaigns, it was a multi-national force and its units came from Australia, British India, Canada, Czechoslovakia, the Free French Forces, Greece, New Zealand, Poland, Rhodesia, South Africa, Mauritius, as well as the United Kingdom. During 1943, it made up part of the 18th Army Group before being assigned to the 15th Army Group (later, the Allied Armies in Italy). It later directed Allied forces through the remaining engagements of the Western Desert campaign, oversaw part of the Allied effort during the Tunisian campaign and finally led troops throughout the Italian campaign.

It was created the better to control the growing Allied forces based in Egypt and to direct their efforts to lift the siege of Tobruk via Operation Crusader.

It was formed as the Western Army on 10 September 1941, in Egypt, before being renamed the Army of the Nile and then the Eighth Army on 26 September. The Eighth Army was a field army of the British Army during the Second World War.

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