Developed from the highly successful Daimler Dingo Scout Car, the Daimler Armoured Car was one of the widest used British reconnaissance vehicles during the mid-war period. It incorporated the unique mechanical design of the Dingo, including a transmission based around a pre-selector gearbox and fluid flywheel which was a characteristic of Daimler's civilian vehicles as well. The transmission also featured separate driving shafts and universal joints to each wheel. However, the Dingo's four-wheel steering was not incorporated in order to make it easier to handle. Given the extra weight, a more powerful 95-hp engine was fitted. The turret was based on that of the Tetrarch light tank and featured a QF 2-pdr gun which offered some modest anti-tank capability which was augmented further when equipped with the Littlejohn adaptor. Overall, the Daimler was considered a very capable and reliable vehicle, with excellent off-road performance. It was first employed in North Africa and followed the British Army throughout the remainder of the war, in many cases paired with the Dingo. The Daimler went on to serve with nearly a dozen countries, and used in a numerous post-war conflicts well into the 1970s.

Following prototype trials, production vehicles of the Daimler Armored Car Mk. I began entering service in 1941, with combat service beginning the following year. Small changes to its external stowage (including a spare wheel) were added over the course of the production run. THe only other variant was the Mk. II with a more rounded gun mantlet, improved cooling, and an escape hatch above the driver. Close support versions armed 75-mm guns were tested but did not see combat.