The TARDIS materializes in a nearby bunker. The Doctor introduces Amy to Winston Churchill who tries to take the TARDIS key from him. Churchill complains that it is a month since he phoned the Doctor. Another enemy formation is coming in and the Prime Minister takes Amy and the Doctor to the roof to see something. Churchill warns that invasion is expected any day and he will use whatever weapons he can. A squadron of Stukas comes into view over London. They are promptly shot down by energy beams fired by "Ironsides". Professor Edwin Bracewell is introduced to the Doctor as the inventor of the Ironsides. They are, in fact, Daleks wearing khaki camouflage paint and the Union Flag.
The Doctor insists that these are alien monsters but the Daleks seem to be subservient. They deny knowledge of the Doctor and intone that they are the soldiers who will win the war. The Daleks even arrive with cups of tea. Churchill argues that the Ironsides will bring victory. The Doctor appeals for Amy to tell Churchill about the Daleks but she has never heard of them. This seems impossible to the Doctor.
The Doctor goes to the Professor, their inventor. Bracewell is working in his laboratory. The Doctor asks what other inventions he has made. Bracewell shows him blueprints for gravity bubbles and hyper-sonic flight. The Dalek says that the Daleks will be death for everybody. He turns on the nearest Dalek and asks which war they are fighting; the war against Germany or the war against the Universe. He sets about striking the Dalek with a large wrench. He tells the Dalek that he is their greatest enemy and recounts some of his victories against them, finishing with "I am the Doctor, and you are the Daleks!" the Dalek then seems to shift personality and plays back the sound of the Doctor's voice before saying that it is the Doctor's 'testimony'. It transmits this testimony to a Dalek saucer that is hiding behind the moon.
Two soldiers run in to but they are exterminated. The Professor tells them to stop. He shouts that he is their creator. Amy and Churchill stand beside the Doctor, watching in horror. The Dalek shoots Bracewell's hand off, exposing wiring and revealing him to be an android robot. It replies "No, we created you!" The Daleks then chant "Victory" as they teleports away. The Doctor tells Amy that he wanted to know what their plan was but it turns out that he was their plan. He runs to the TARDIS, ordering Amy not to follow because it is too dangerous.
On the Dalek saucer the testimony has initiated a device called the Progenitor. The Doctor flies up to the Dalek ship. The Daleks are standing around the Progenitor. The TARDIS lands near them and the Doctor emerges carrying a Jammy Dodger biscuit. He tells them that it is the TARDIS self-destruct control and warns them not to scan it or they will all die together. The ensuing conversation reveals that theirs was the only ship to survive the defeat in the Medusa Cascade. They traced and obtained the last remaining Progenitor device. This is their 'past and future'. It turns out to contain pure Dalek DNA. The Progenitor Device did not recognize these Daleks since they were created from Davros' DNA. They needed the testimony of the Doctor to convince the Progenitor that they were Daleks.
The Daleks tell the Doctor to withdraw or they will destroy London. He says that they don't have the power; their ship is a wreck. The Daleks activate a device and all of the lights in London come on. This makes the city an easy target for the next wave of approaching German bombers. In the secret cabinet rooms the staff becomes aware that the light switches are ineffective and Churchill proclaims that they are sitting ducks. He is told that the Germans are only ten minutes away. Amy says that they need a weapon to fight back and it is staring them in the face. The Daleks says that they will leave and return to their own time and complete their rebirth. The Progenitor completes its program and five new Daleks emerge. They are larger and more brightly coloured than previous Daleks.
Amy and Churchill find Bracewell about to shoot himself because his life and memories are a lie. Amy appeals to him to provide weapons that can fight the Daleks. Bracewell is galvanised into action.
The new Daleks tell the old ones that they are inferior and disintegrate them. They then turn their attention to the Doctor who warns them not to mess with him and brandishes his biscuit at them.
Bracewell arrives with a prototype television that shows images of what is happening on the Dalek ship. Amy and Churchill join him to watch as the Doctor faces the five Daleks. They introduce themselves as the new paradigm: scientist, soldier, strategist, eternal and supreme. Meanwhile, Bracewell's new invention is ready to go. One of the RAF men in the cabinet room scrambles a squadron. The new Daleks are not fooled by the Doctor's "self-destruct device", and he bites into it as he confesses that it was a biscuit all along. As they prepare to kill him their screens show an incoming group of Spitfires. They call the Doctor for orders and he tells them to turn their attention to the dish on the side of the ship.
The Doctor flees into the TARDIS as the Spitfires try to destroy the Dalek transmitter. Two of the Spitfires are destroyed by the Dalek defences but the Doctor uses the TARDIS to disrupt the saucer's shields allowing the final Spitfire, Danny Boy, to successfully blow up the device. The Doctor tells Danny Boy to destroy the Dalek ship but Daleks order the Doctor to call off or they will destroy the Earth using an "Oblivion Continuum" bomb which has been hidden inside Bracewell's body. The Doctor realises that he has to give up on his best chance of ridding the universe of the Daleks forever. He flies down to the war rooms. The Daleks note that the Doctor's compassion has failed him. They open a Time Corridor and prepare to depart but not until they have started the bomb's countdown anyway.
The Doctor tells everyone in the war room that there is a wormhole inside Bracewell but it cannot explode if Bracewell believes himself to be human, not a bomb. He tries to use all of the scientist's implanted memories to make him feel strong emotions but the countdown continues. As the Oblivion Continuum nears detonation, Amy asks Bracewell about his love life: if he has "ever fancied someone you shouldn't". Bracewell recounts a lost love: a girl named Dorabella. The countdown returns to zero. The Daleks note their failure before leaving through the time corridor. The Doctor is turning to his TARDIS to stop the Daleks, but he is told by Bracewell that they have gone. He is dejected at losing out to them until Amy reminds him that he has saved the Earth.
There are celebrations and farewells in the cabinet room, during which Churchill tries to pickpocket the Doctor and steal the TARDIS key. He is foiled by Amy and then the Doctor and Amy go to Bracewell's laboratory to find the scientist. The Doctor has removed all of the technology that Bracewell introduced and so the scientist anticipates being terminated. Instead they allow him to leave to carry on his new life. As Amy and the Doctor return to the TARDIS the Doctor is concerned about Amy's inability to remember the Daleks from their previous attacks. The TARDIS dematerializes and reveals a shining crack in the wall.