From Wallingford Henry marched north through central England, where towns and castles one after another fell into his hands. From Wallingford also, Eustace withdrew from his father, greatly angered by the truce which had been made, and went off to the east on an expedition of his own which looks much like a plundering raid. Rashly he laid waste the lands of St. Edmund, who was well known to be a fierce protector of his own and to have no hesitation at striking even a royal robber. Punishment quickly followed the offence. Within a week Eustace was smitten with madness and died on August 17, a new and terrible warning of the fate of the sacrilegious. This death changed the whole outlook for the future. Stephen had no more interest in continuing the war than to protect himself. His wife had now been dead for more than a year. His next son, William, had never looked forward to the crown, and had never been prominent in the struggle. He had been lately married to the heiress of the Earl of Surrey, and if he could be secured in the quiet and undisputed possession of this inheritance and of the lands which his father had granted him, and of the still broader lands in Normandy and England which had belonged to Stephen before he seized the crown, then the advantage might very well seem to the king, near the close of his stormy life, greater than any to be gained from the desperate struggle for the throne. The Archbishop of Canterbury, who had by some means returned to England, proposed peace, and undertook negotiations between the king and the duke, supported by Henry of Winchester. Henry of Anjou could well afford to wait. The delay before he could in this way obtain the crown would probably not be very long and would be amply compensated by a peaceful and undisputed succession, while in the meantime he could give himself entirely to the mission which, since he had landed in England, he had loudly proclaimed as his of putting an end to plundering and oppression. On November 6 the rivals met at Winchester to make peace, and the terms of their agreement were recited in a great council of the kingdom, probably the first which was in any sense a council of the whole kingdom that had met in nearly or quite fifteen years. First, the king formally recognized before the assembly the hereditary right of Henry to the kingdom of England. Then the duke formally agreed that Stephen should hold the throne so long as he should live; and king, and bishops, and barons bound themselves with an oath that on Stephen's death Henry should succeed peacefully and without any contradiction. It was also agreed under oath, that all possessions which had been seized by force should be restored to their rightful owners, and that all castles which had been erected since the death of Henry I should be destroyed, and the number of these was noted at the time as 1115, though a more credible statement gives the number as 375. The treaty between the two which had no doubt preceded these ceremonies in the council contained other provisions. Stephen promised to regard Henry as a son - possibly he formally adopted him - and to rule England by his advice. Henry promised that William should enjoy undisturbed all the possessions which he had obtained with his wife or from his father, and all his father's private inheritance in England and Normandy. Allegiance and homage were paid by Henry to Stephen as king and by William to Henry, and Henry's barons did homage to Stephen and Stephen's to Henry, with the usual reservation. The king's Flemish mercenaries were to be sent home, and order was to be established throughout the land, the king restoring to all their rights and resuming himself those which had been usurped during the disorders of civil strife.
This programme began at once to be carried out. The war came to an end. The "adulterine" castles were destroyed, not quite so rapidly as Henry desired, but still with some energy. The unprincipled baron, friend of neither side and enemy of all his neighbours, deprived of his opportunity by the union of the two contending parties, was quickly reduced to order, and we hear no more of the feudal anarchy from which the defenceless had suffered so much during these years. Henry and Stephen met again at Oxford in January, 1154; they journeyed together to Dover, but as they were returning, Henry learned of a conspiracy against his life among Stephen's Flemish followers, some of whom must still have remained in England, and thought it best to retire to Normandy, where he began the resumption of the ducal domains with which his father had been obliged to part in the time of his weakness. Stephen went on with the work of restoration in England, but not for long. The new day of peace and strong government was not for him. On October 25, 1154, he died at Dover, "and was buried where his wife and his son were buried, at Faversham, the monastery which they had founded."