Since 1878 Cyprus found itself in a peculiar international status. According to the Anglo-Turkish Treaty of Constantinople, the island was under the de facto rule of Britain,

which was occupying and administering the island, and the de jure rule of the Sultan. The annexation of Cyprus to the British Empire occurred in 1914, when, with Britain and Turkey in enemy camps at the outbreak of the First World War, the treaty was renounced.

In this period the main Cyprus issue concerned the taxation drainage imposed by the British from the outset of the occupation: the British aimed to recoup enough money to pay an indemnity to the Sultan for the island.
With the British occupation, however, and the practical end to Ottoman rule, the Greeks were reinforced ethnologically as conditions became safer for them after the departure of the Turks. The Greek population increased, while at the same time a percentage of the Muslim population emigrated to Turkey after the establishment of the British rule in the island. The emigration of Greek Cypriots to Egypt, which had already begun in 1860, continued, whereas in 1910-20 emigration was directed towards America.
This period witnessed economic development, including the creation of an infrastructure for future economic growth. Social changes were also observed. These led to political conflicts and social issues that would culminate during the inter-war period. Educational and intellectual activity also flourished. Demotic Greek dominated as the linguistic tool of literature, while the first samples of the Cypriot narrative prose emerged.

Cypriot disenchantment with the government and the economic exploitation of the British contributed to a towering irredentist movement in the island.

The demand for Union with Greece was systematically expressed from the beginning of the British occupation. In 1903, the demand was officially voiced for the first time by the Greek deputies in the Legislative Council. It was repeated in 1904 and in 1907 it was included in a memorandum handed to Churchill. These moves resulted in competition with Turkish representatives. From now on the different national leanings of the Greek- and Turkish-Cypriots, craftily reinforced by Britain, began to create an acute issue in Cyprus. In 1911-12 the demand for Union as a future possibility was repeated in many different circumstances. In the military onrush for national integration the Cypriots participated as enthusiastic volunteers and as fundraisers. The annexation of 1914 was hailed by the Cypriots with relief. They were glad to see an end to Ottoman rule and the policy of national integration, or Union, approaching. The Cypriots enlisted as volunteers in the auxiliary forces of Britain and were dispatched to the fronts of southeastern Europe. Enthusiasm was at a peak and the Cypriot newspapers wrote fervently about the Union. At one stage of the negotiations (concerning Greece entering the Entente), Britain proposed to cede Cyprus to Greece, but the proposal was rejected by the government of Zaimis and Britain was quick to revoke it. Cypriot demands for self-government were ignored throughout the British occupation.
During negotiations after the end of the war, a Cypriot delegation pleaded for Union with Greece. In 1920, however, it was officially announced to the Cypriot delegation that the British government was rejecting its claim. Disenchantment, but also fresh hopes, paved the way for the national struggles of the inter-war period.