Paw licking is usually an environmental allergy, but licking on the back is almost exclusively a flea allergy thing. In sensitive dogs, even a single flea bite can cause systemic itching.

Basic allergy overview:
http://www.veterinarypartner.com/Con...S=0&C=0&A=2604

Self-mutilation in dogs:
http://www.veterinarypartner.com/Con...S=0&C=0&A=2322

I would bet anything that she has fleas...if that is the case (and this should be mandatory for any dog that itches for any reason anyway), 100% flea control ASAP is key.

That means Capstar for every cat and dog in the house, followed by Frontline on every pet every 3-4 weeks for life, and I would strongly recommend a house treatment with a carpet spray that contains an Insect Growth Regulator (IGR) such as Nylar. The one my clinic recommends is Knock-Out, but there are others on the market as well.
Expect treatment to take around three months before all fleas are completely eliminated.

I have -never- seen a dog lick its back that did not have fleas. There is often a weepy secondary infection with a characteristic moldy/musty/mousy smell.

Flea Allergy Dermatitis:
http://www.petplace.com/dogs/flea-al...ogs/page1.aspx
Pop-ups, but good info and pics.

Flea control:
http://www.petplace.com/dogs/how-to-...dog/page1.aspx