For the moment Stephen was secure. In fact initially Stephen was a popular king. He had an affable nature but a firm hand and rapidly commanded respect. He was fair in his judgements and seemed to have the common touch so that he was supported by the vast majority of the English. There were, however, disputes. David I, the king of Scotland, invaded Northumberland and claimed the territory in the name of his niece, Matilda. In fact David's intentions were more to reclaim what he believed were his own territories by right of succession, and he used Matilda's cause as an excuse. Stephen's skirmishes against David were all successful, culminating in the battle of the Standard in August 1138. Stephen had less success in the Welsh Marches, the stronghold of Robert of Gloucester, Matilda's half-brother, and it was here that Stephen's weakness lay. Although Robert had given token allegiance to Stephen it is evident that the two remained distrustful of each other. Even though Robert accompanied Stephen in 1137 in his expedition against Geoffrey of Anjou, Matilda's husband, who had been making regular incursions into Normandy, he did not act outright against Geoffrey and, by all accounts, began to support Geoffrey in his actions. In May 1138 Robert, who was then in Normandy, issued a declaration whereby he renounced his homage to Stephen. Stephen promptly forfeited Robert's lands and the only way Robert could regain them was by invading. Matilda now had an army to support her own claim to the English throne. Such were the roots of the first English civil war.

Once the rift was declared, Norman loyalties wavered and Robert was able to gain further support. It was during this period that Stephen's once sound judgement began to waver, but his determination caused him to make some ill-founded decisions that seriously weakened his position. First, in December 1138, he alienated his brother, Henry, by not supporting his claim to be archbishop of Canterbury, which went to the manipulative Theobald of Bec. Second, in June 1139, he arrested Roger, bishop of Salisbury and his nephews Alexander, bishop of Lincoln, and Nigel, bishop of Ely. These three, together with two of Roger's sons, had a tight control over much of the administration of England. It had come to Stephen's attention that all of them, under the leadership of Roger, were fortifying their castles in support of Robert of Gloucester. Stephen moved against them, arresting them on the grounds of threatening the peace. Henry of Winchester immediately denounced Stephen as infringing church authority, but Stephen's actions were subsequently upheld by the pope. In taking control of these bishops' castles Stephen had made a major military advance, but he had also made many enemies amongst their supporters. Third, after the battle of the Standard, Stephen gave the castle at Carlisle to the Scots. This enraged Ranulf, earl of Chester, since Carlisle and Cumbria had been part of the lands of his father, which had been forfeited following his father's insurrection against Henry 1. Ranulf still regarded them as part of his heritage, and to have them given to the old enemy, the Scots, was more than he could bear. From then on Ranulf became an enemy of the king and though he allied himself to Robert of Gloucester's camp, it was more for his own personal revenge than for any support of Matilda.

In September 1139 Robert and Matilda made their move. Although Stephen had the ports barred, they arrived on the south coast and found refuge at Arundel which was under the control of Henry I's second wife, Adeliza, who had recently married William d'Albini, earl of Arundel. Stephen promptly marched on Arundel, but Robert had already left through minor and well-hidden by-ways to Bristol. Stephen pursued him without success, and it seems Robert may have been aided en route by Stephen's brother Henry. Certainly Bishop Henry successfully negotiated with Stephen to release Matilda under oath and he escorted her to Robert in Bristol. From the vantage point of history this seems a remarkably naive action, though it emphasises Stepheii's chivalric nature. Evidently Stephen believed there was little support for Matilda, and his main concern was Robert. Nevertheless, with Matilda by his side, Robert was able to draw upon her right of succession and held the equivalent of a separate court in the lands faithful to him, which were mostly the old heartland of Wessex in Wiltshire, Gloucestershire and Somerset. Soon William Fitzrichard, who held lands in Cornwall, sided with Matilda. This brought another of Henry's illegitimate sons, Reginald, earl of Cornwall and the full brother of Robert of Gloucester into the fray. Nevertheless, if Stephen had managed to contain the war within the south-west, he might have finished it quickly, and certainly his impressive energy gave him the upper hand during 1140. However his position was undermined when opposition broke out in East Anglia, focused on the support for the imprisoned Bishop Nigel of Ely. Trouble soon spread to Lincoln. Stephen had granted the Castle of Lincoln to William d'Albini, the husband of the dowager queen Adeliza. Ranulf of Chester believed he had a right to Lincoln and, although Stephen was prepared to accept this, and even granted the castle to Ranulf's half-brother William, Ranulf seemed less than satisfied. By Christmas 1140 the two brothers had seized Lincoln in their own name. The townsfolk rebelled and sent for Stephen's aid. Stephen laid siege to the town, although Ranulf had already escaped to gain the support of Robert of Gloucester. In this he was successful and Robert advanced with a large army upon Lincoln. Stephen was advised to retreat but he stubbornly refused. Victory here could well end the civil war. Moreover Stephen had promised help to the people of Lincoln and he was not about to let them down. Despite his smaller force, Stephen led his men into battle on 2 February 1141. It was the only major battle of the civil war and could have been decisive. Stephen fought bravely but he was outnumbered and his force was defeated.

Stephen was captured and imprisoned at Bristol. Although some remained loyal to Stephen they rapidly suffered as a consequence, and before long most turned their allegiance to Matilda, in the belief that Stephen would remain permanently imprisoned. Matilda and her forces gradually assumed control. They received the support of Bishop Henry in early March, and thereby had access to the royal coffers. She settled in London and began to rule as a queen, a title she occasionally used, though she more formally kept to her title of "empress" and sometimes as "Lady of the English". But she rapidly become unpopular and when she lost the support of Bishop Henry, the tide turned against her. Stephen's queen, also called Matilda, and her chief lieutenant, William of Ypres, remained forever faithful along with many of the people of Kent. The "Empress" was driven out of London and the planned coronation never took place. She took up residence in Oxford. However, in September Robert of Gloucester was captured during an incident at Wherwell. Now there was stalemate. Matilda was forced to accept an exchange of prisoners. Stephen was restored to the throne in November and enjoyed a second coronation on Christmas Day. The war was not won, but Stephen became more tenacious. England was divided, but Stephen retained the upper hand. In May 1142 Robert took a hazardous journey to Normandy to gain support from Matilda's husband, Geoffrey, but he was too busy trying to gain control of Normandy and refused assistance. Whilst Robert was absent Stephen pressed home his advantage and by December had Matilda under siege at Oxford Castle. She escaped at night and fled safely to Abingdon. It is worth noting that resident at Oxford at this time was Geoffrey of Monmouth who, just a few years earlier, had completed his History of the Kings of Britain. The book was dedicated to Robert of Gloucester.

The civil war would drag on for a further five years. Although Stephen continued to hold the advantage he could never rule in total confidence. A strong reminder of this came when the Empress's forces scored a notable victory over Stephen at Wilton. Stephen became less assured of his authority and frequently arrested people at a moment's notice on suspicion. Among these was the treacherous Geoffrey de Mandeville, constable of the Tower of London, who had been made earl of Essex. His support swung with the prevailing breeze and after his arrest his forces raised a rebellion in 1143, which Stephen was able to quash. For a while Robert and the "Empress" believed they might still have a chance, especially after Geoffrey of Anjou gained control of Normandy in January 1144, but to no avail. In 1145 Robert of Gloucester's son, Philip, transferred his allegiance to Stephen. Gradually Stephen wore down opposition, but in this process England was slowly being destroyed. In October 1147 Robert of Gloucester died, and a few months later Matilda left England. Her cause was taken up by her son Henry, the later HENRY ii, but he did not have the resources to support a sustained war. Skirmishes continued throughout 1149, but nothing of any substance. The English civil war did not so much end as fizzle out. Stephen, though, was a shadow of his former self. The civil war had broken him. The strong, resolute, affable man of 1136, was now an ill, haunted, uncertain individual. His continued policies at home were thwarted by Theobald, archbishop of Canterbury, who refused Stephen's involvement in church affairs. Theobald found himself briefly exiled from England, but Stephen soon realised this worked against him. Stephen wanted to secure the succession for his son, EUSTACE, count of Boulogne, but he needed the approval of the archbishop to have him crowned. This Theobald refused to do. Although Stephen declared his son king of England in 1152, this was not acknowledged by the church. Stephen, now much saddened by the death of his wife in May 1152, became a broken man. In 1153 Henry of Anjou brought a force to England to establish his right to the throne. The engagements were all indecisive, not helped by Stephen's apparent lack of strength. Suddenly, in August 1153, Eustace died. Stephen's ambitions collapsed. He signed the Treaty of Wallingford with Henry in November 1153, acknowledging Henry as his heir and successor.