Daughter of Capt. George Connolly Benson (King's Shropshire Light Infantry) and Margaret Jones, Marguerite was adopted by Joseph and Margaret Jane Steen. Educated at a private school and subsequently, with much more success, at Kendal High School, at 19 she became a teacher in a private school. After three years she abandoned that career and went to London to fulfill her ambition of working in the theatre. Failing to gain entry to the theatrical world, she accepted instead an offer to teach dance in Yorkshire schools. This earned her a comfortable living (rising to over £500 a year) which enabled her to spend long periods travelling in France and Spain...the latter becoming her adopted homeland. In 1921, she managed to join the Fred Terry / Julia Neilson drama company, at £3 per week, and spent three years touring with them. She was befriended by Ellen Terry, and when she found herself unemployed in 1926, took her advice and wrote a novel (not her first, strictly speaking, as she had made an attempt at the age of 8). This work, The Gilt Cage, was published in 1927, and was followed by some 40 more books.

Very much at home among creative people, she would write biographies of the Terrys, of her friend Hugh Walpole, of the 18th century poet and actress (and sometime mistress to the Prince of Wales) Mary 'Perdita' Robinson, and of her own lover, the artist Sir William Nicholson with whom she lived from the late 1920s until his death in 1949, and whom she would have married if his wife, from whom he formally separated in 1933, had been willing to grant a divorce. Marguerite had a fair artistic talent herself, and in the 1930s she also wrote a couple of plays, but her forte was the historical novel.

Her first major success was Matador (1934), for which she drew on her love of Spain, and of bullfighting. This was picked up by both the Book Society in Britain, and the Book of the Month Club in the USA. Also a best-seller on both sides of the Atlantic was the massive slave-trade and Bristol shipping saga The Sun Is My Undoing (1941); this was the first part of a trilogy, but the remaining volumes were far less popular. Though never quite accepted by literary critics- Sun..., for example, was described as "vigorous but tinselly"- she was elected a Fellow of the Royal Society of Literature in 1951. Her two volumes of autobiography, Looking Glass (1966) and Pier Glass (1968) offer some delightful views of the English creative set from the 1920s to the 1950s.

Her home at the time of her death was the cottage she had shared with Nicholson during the last years of his life, in the village of Blewbury, Berkshire, bought after their London home was destroyed by a Second World War bomb.