In 1870, the caterers Spiers and Pond began development of the site of the White Bear, a seventeenth-century posting inn.

The redesign placed the large Criterion Restaurant and dining rooms above the theatre, with a ballroom on the top floor.

When Spiers and Pond applied for a licence to operate, the authorities were unhappy because the theatre was underground and lit by gas, creating the risk of toxic fumes.

The Metropolitan Board of Works had to vote twice before the necessary licence was issued, and fresh air had to be pumped into the auditorium to prevent the audience from being asphyxiated.

The programme consisted of An American Lady written and performed by Byron and a piece by W. S. Gilbert, with music by Alfred Cellier, entitled Topsyturveydom.

"[3] Gilbert had, however, been back at the theatre in 1877 with his farce, On Bail (a revised version of his 1874 work, Committed for Trial); in 1881, with another farce, Foggerty's Fairy; and in 1892, with a comic opera, Haste to the Wedding, with music by George Grossmith (an operatic version of Gilbert's 1873 play, The Wedding March).

The pumping of fresh air into the ten-year-old auditorium, some thirty feet below street level, was deemed unsatisfactory.

Dramatic Notes (1884) states "The Criterion Theatre, transformed from a stuffy band-box to a convenient, handsome, and well ventilated house, reopened on April 16".

[citation needed] Between the world wars, productions included Musical Chairs with John Gielgud and in 1936, French Without Tears which ran for 1,039 performances and launched the writing career of Terence Rattigan.

During the Second World War, the Criterion was requisitioned by the BBC – as an underground theatre it made an ideal studio safe from the Blitz – and light entertainment programmes were both recorded and broadcast live.

The early part of 1956 saw the arrival of Anouilh's popular comedy, The Waltz of the Toreadors, with impressive performances by Hugh Griffith and Beatrix Lehmann.

Throughout the 1970s and early 1980s the argument increased, and the Equity Save London's Theatre Committee organised high-profile demonstrations (campaigners included John Gielgud, Marius Goring, Edward Woodward, Diana Rigg, Robert Morley and Prunella Scales) as they feared that the theatre would still be lost.