Poor guy. Sounds like this itching problem is driving him crazy.
1. For immediate relief, try the Benadryl. Ask the vet how much to give. Or, maybe the vet has something stronger. If your vet isn't very helpful or blows you off, find another vet, sooner rather than later. You don't want this problem getting so out of hand that he scratches to the point of breaking the skin. Then you've got real problems.
2. Try Relief Shampoo. If I am unable to add a link here, just do a Google search on "Relief Shampoo" and you'll find lots of sites that sell it. Some vets even sell it. It is oatmeal based and very soothing and helps with itchy skin irritations. Be careful not to get it in your baby's eyes.
http://www.vetmeddirect.com/Relief-S...pr--019DVM0312
3. Make sure you rinse, rinse, rinse. That is very important.
4. Do you have a dermatologist within a reasonable drive? You need a vet who knows enough about skin problems to diagnose this problem and give you something to give your furkid relief.
Good luck.