One of our dogs has a similar skin complaint, plus he has a flea allergy. He has the usual flea treatments for the allergy. I also give him any oil from cans of fish and roll his biscuits in any fat I have left in the pan after shallow frying. He also gets the largest share of any fat that's been cut off meat and when we buy beef bones, I make sure he has the one with most fat on it. He very rarely has flare-ups now, but if he does, I rub a bit of tea tree oil into the patch of flaky skin. This oil has antiseptic properties and is said to be useful for treating skin conditions. It is toxic if taken by mouth, but our dog never tries to lick it off, perhaps because it has a "camphoraceous" smell, as Wikipedia puts it.
He used to need prednisone for his condition, but it's a while now since he's needed it.
