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This could be scabies, which is an infestation by the itch mite. Scabies produces small red bumps and blisters and affects specific areas of the body. The bumps (medically termed papules) may contain blood crusts.
Itching is the most common symptom of scabies. The itch of scabies is insidious and relentless. The itch is usually worse at night. For the first weeks, the itch is subtle. It then gradually becomes more intense.
Self-treatment is not recommended. Although there are many remedies on the Internet, none are as effective as prescription medications.
The most appropriate treatment is for a topical medication or cream to treat the scabies and anti-itch medications for relief.
The medication most commonly used to kill the mites is called Elimite (or permethrin cream). The medication is applied from the head area to the bottom of the feet. It is left on for 10-14 hours and then washed off in the shower. It is best to apply at bedtime and then wash off in the morning. This treatment is then repeated in 1 week.
Occasionally, the rash area can become infected. This is separate from the scabies and is usually a bacterial infection. If this occurs, it is treated with an oral antibiotic or an antibiotic ointment applied to the area.
Antihistamine like diphenhydramine (Benadryl), hydroxyzine (Atarax), cetirizine (Zyrtec) can relieve the itching.
All family members and close contacts should be treated.
ref:http://www.emedicinehealth.com/scabies/page7_em.htm
ref:http://www.medicinenet.com/scabies/article.htm