Flea Dermatiteous. He's allergic to fleas. Another reason may be dry skin. Perhaps a little of both. Try putting a tsp./tbsp. veggie oil in his food at night. This will help for dryness of his coat. Also, (wierd I know) but a clove of garlic in his food every now and again! It's a natural remedy for fleas and ticks. Wierd, but true! If he won't eat it, try wrapping it in some cheese, or lunch meat. (mash it first if you can..) Give him a good flea bath, and make sure to rinse his coat well.!! Reward after his bath, with the cheese/garlic treat! And you should be on your way to having a happy dog day! YeAAA! Take Care and Good Luck!
Food allergies are usually the most troublesome, because it is so hard to pin point the exact ingredient a dog is allergic to. A lot of dog foods have a lot of same ingredients .. Talk to the people at your pet food store .. they usually have some good information and suggestions on how to alleviate this type of reaction.
I had this problem recently with one of my dogs. (1) Check for fleas; if you find even one or "flea dirt," you have a flea problem and need to treat for it. The topical pesticide treatments are very effective though expensive. (2) Check with your pet supply store for an OTC non-alcohol antiseptic "hot spot" treatment. Get one without alcohol so it doesn't sting. Use as the label says to keep the area clean. (3) Carefully inspect the spot every day to make sure it's not getting infected. At the first sign of broken skin or seepage of clear or light yellow serum or blood, make a vet appointment. If an infection gets started, it's harder to get under control. My dog's irritated spot was about 1" x 2" and she had a little bald spot. But i got it under control (no fleas, still don't know what caused it) and she's fine now. Hope your dog will be all back to normal soon.