In the 1920s and early 1930s, the Foreign Office realised the need for an organisation responsible for the promotion of British culture, education, science and technology in other countries, along the lines of existing French, German and Italian cultural organisations.  This led to the setting up of the 'British Committee for Relations with Other Countries' in 1934.  The name was later changed to the 'British Council for Relations with Other Countries, and then shortened to the 'British Council'.

Although set up and partly funded by the Foreign Office, and working closely with it, the British Council had its own Chairman and Committee, and was responsible for its own policy and activities.

The work of the early British Council included support to British Institutes and societies and English schools in other countries, recruitment of university lecturers, support to students and English teachers, books and periodicals for libraries, lecture tours, music performances and art exhibitions.  Priority was given to the countries of the Middle East and Mediterranean region, Europe and Latin America.

Working at first through British Embassies and High Commissions, the British Council appointed its first overseas representative to Egypt in 1938, followed by Portugal, Poland and Romania later that year.

With the entry of Britain into the Second World War in 1939, the Government at first considered amalgamating the British Council with the newly formed Ministry of Information, which was responsible for propaganda.  However, the British Council Chairman, Lord Lloyd, successfully argued for the value of the British Council as an independent organisation, responsible for building long-term relationships.  Although its information work was transferred to the new Ministry, the Government encouraged an expansion of its cultural and educational work.

As the War progressed, activity had to be withdrawn and staff evacuated from all European countries except Portugal, Spain and Sweden.  However, at the request of the Government, centres were set up in many cities in the UK to provide educational and cultural support to refugees and Allied service personnel.  Centres for Allied servicemen in the Middle East were later set up in Egypt and Palestine.  After the war, the UK centres continued to provide support to students and visitors from other countries.

After 1945, the British Council restarted and expanded its work in the rest of Europe.  However, in other parts of the world, reductions in Government funding meant that activity and staff had to be withdrawn from many countries.