Have you ever tried Preperation H on your blisters? It sounds weird but I had tonnes of blisters when I started hiking and a ballet dancer friend of mine said that all the girls had Prep H in their bags for their feet. It worked like a charm for my blisters.
sounds like you have either contact dermatitis or severe case of athlete's feet.
soak the foot in epson salt and warm water to help dry out the blisters. preparation H also will help dry them out and calm down the itching because it contains witch hazel and cortisone. an antifungal cream (lamisil) and a cortisone cream application to the area for 1-2 weeks help too.