During the First World War, government cryptanalytical services had developed independently in the Admiralty, where Room 40 (1914-1917) and later the Naval Intelligence Division (NID) dealt with the requirements of both the Royal Navy and the Royal Naval Air Service, and in the War Office, where MI 1(b) dealt with the requirements of the Army and the Royal Flying Corps. In 1919 the Cabinet decided to introduce an inter-service organisation. A small number of officers from NID and MI 1(b) were brought together to form government Code and Cypher School (GCCS), initially under Admiralty control.
In 1922, GCCS, along with the Secret Intelligence Service (SIS), passed to the control of the Foreign Office as it was found that there was no Service traffic worth circulating and the bulk of the material decrypted ws diplomatic. In 1923, there was further re-organisation, and the head of SIS was also appointed director of GCCS, while the staff and organisation remained separate from SIS. The original staff of GCCS had only been seconded from the forces, and they retained their military rank. As further staff were added to the establishment, they were organised in Service Sections: the Naval Section in 1924; the Army Section in 1930; the Air Section in 1936. These sections were organised into sub-sections working on particular targets - for example, the Naval Section had an Italian sub-section. It was planned that in the event of war, these sections would be absorbed back into the appropriate service, so that interception and cryptanalysis, as well as evaluation of signals intelligence, should remain a service responsibility. General administration of GCCS was carried out by the Joint Committee of Control.
GCCS had two functions; on the one hand as a 'School' dedicated to the study of world-wide cryptographic method and practice; and on the other as a Sigint Centre committed to the extraction of the maximum of intelligence with the least delay from such communications as were currently indicated as wanted. Despite the continuing forces' interest in maintaining their own wireless interception and cryptanalytical functions, there were factors making it increasingly likely that the inter-departmental structure would be kept even in the event of war. In 1924, GCCS established a Cryptography and Interception Committee (known during the war as the Y Board, Y being the term used for wireless interception), with the consent of the Foreign Office and at the request of the forces, to guide its work and settle its priorities. It met rarely, however, and in 1928 it set up a standing sub-committee to co-ordinate wireless interception between the school and the forces (the Y Sub-committee). The services were represented on the sub-committee, and an informal system of co-operation was developed, within which there was much inter-service integration.
In the eighteen months leading up to the outbreak of the Second World War, all three services conceded that GCCS should retain its service sections and would form an inter-service organisation in wartime. In 1937, the Y sub-committee arranged for the General Post Office to erect and man the first of several stations which would intercept enemy diplomatic traffic, leaving the service stations free to concentrate on military traffic. Despite successes in analysis of Italian and Spanish intercepts in the inter-war years, GCCS made little progress in decyphering German, Soviet and, from 1937 when a new cypher was introduced, Japanese communications. A German Section was established, working on behalf of all three services with a civilian staff to try to decypher the Enigma code, and in 1938, Naval and Army sub-sections were added. Just before the outbreak of war GCCS staff was greatly increased. In Aug 1939, GCCS moved to War Station at Bletchley Park. For lack of space the Diplomatic sections soon moved to Elmers School and early in 1942 back to London. This was to facilitate contact with the Foreign Office.
Each branch of the armed services experienced severe difficulties as a result of doing their own traffic analysis remote from the cryptanalysis. The resulting communications problems were in part responsible for some of the failures of the Norwegian campaign, culminating in the loss of HMS Glorious, after which Admiralty staff were returned to GCCS, and steps were taken to make the Admiralty's Operational Intelligence Centre work more closely with GCCS's Naval Section. The lack of adequate army intelligence during the fall of France was followed by the attachment of a small military intelligence traffic analysis unit to GCCS. This had such good results that in Dec 1940 all MI's traffic analysts were attached to GCCS. The RAF's failure to identify German Air Force Targets during the blitz led at the end of 1940 to the creation of two separate units within the Air Section, one to work on German fighter activity, and one concentrating on other units. These changes represented the final recognition of the benefit to be gained from traffic analysis and cryptanalysis being done in the same place. Early in 1941, to co-ordinate this work, Y Board set up a parallel sub-committee to the Y Sub-committee, the Cryptanalysis Committee, which soon was superseded by the Enigma Sub-committee of the Y committee, established in March 1941. A GCCS report comment of 12 Sept 1941 stated that the massacre of Jews on the Russian Front by the Secret Service provided evidence for a policy of savage intimidation if not of ultimate extermination; at this time the SS considered details of its atrocities in Russia and the Ukraine too sensitive to be sent by radio and ordered that in future they should be sent to Berline by courier post. To manage information exchange generally, the director established an Inter-Service Distribution and Reference Section. This system came under great strain as a result of tensions between civilian, service and intelligence staff within GCCS as the organisation grew rapidly in size. In Jan 1942 an inquiry was launched, and its recommendations were put into effect in Feb 1942. Administration of GCCS by the Joint Board of Control was abolished, and the civilian sections (i.e. those dealing with diplomatic and commercial cryptanalysis) were withdrawn from the Bletchley Park site and placed under the control of a deputy director (DD(C)). The service sections were also placed under a deputy director (DD(S)), who was responsible for all work carried out at Bletchley Park.
In Oct 1943, the Y Board was renamed the Signal Intelligence Board (SIB), at which point it absorbed the Y Sub-committee. It was given a new charter by the Chiefs of Staff which defined signals intelligence as comprising interception, cryptanalysis, traffic analysis, and special intelligence related to these. The SIB handled the reconciliation of competing service interests, supervised British signals intelligence centres throughout the world, and also handled relations with US intelligence agencies. In 1944 overall responsibility for policy for the security of official British communications was assigned to a Cabinet body, the Cypher Policy Board. The GCCS provided the secretariat to the Board and bore responsibility for implementation of policy.
In 1946 GCCS was renamed Government Communications Headquarters (GCHQ). In 1954 most of GCHQ's communications security responsibilities were transferred to the new London Communications Security Agency (LCSA). However GCHQ co-operated closely with the LCSA and GCHQ's L Division provided advice, cooperation and assistance in communications security matters and produced all code and cypher material for user departments. In 1969 the LCSA (by then named the Communications-Electronics Security Department) was reintegrated into GCHQ as the Communications-Electronics Security Group.