World War I had a tremendous effect on English literature. The war itself become the subject of some very good poetry by soldiers such as Siegfried Sassoon and Wilfred Owen; their poems were usually more innovative in subject matter (e.g. devasted landscapes or poison gas attacks) than they were innovative in structure. Structural innovation, however, dominates the high-brow literature from the emerging writers in the years just after the First World War. The modernist techniques in literature were already developing before the war began, but they found their greatest expression just a few years after the war ended. I think that multiple elements tied to WWI -- such as shell shock and battle-scarred landscapes -- inspired writers who were already interested in exploring the psychology and shattered worlds of their characters.
The single most important study of the impact of the First World War on English literature is probably still Paul Fussell's book-length work The Great War and Modern Memory (1975, 2000). It's written in a very accessible and gives extensive discussions and concrete examples.
World War I shattered the sense of human progress that had dominated much of the nineteenth century in the European psyche. All the leaps forward in medicine and technology of the last century had not led to peace but to a seemingly pointless and destructive war that caused a huge loss of life for little perceived gain. Many of the younger English writers felt betrayed and raised questions about a complacent worldview that could have led to such an outcome. This led to a rise in satire, a sharp contrast to the earnestness that characterized the Victorian age. Writers such as Aldous Huxley raised questions about the benefits of technology and "progress" in satiric novels such as Brave New World. Meanwhile, writers like T.S. Eliot, a U.S. transplant to Britain, expressed in poems such as "The Love Song of J. Alfred Prufrock" the despair at modern life that many felt. The sense of alienation and fragmentation that many felt after the war accelerated the rise of modernist, stream of consciousness writing. Rather than speak from an authoritative perch as people who had all the answers, these writers—such as James Joyce—emphasized personal subjectivity and the limits of what one person could know. Modernist writer Virginia Woolf severely criticized World War I and the kind of limited consciousness that caused it, advocating for a greater voice for women in her A Room of One's Own and arguing passionately against war in Three Guineas. It is worth noting as well that the rebellion against the social order that brought on World War I led to frank writing about sexuality among younger writers, such as James Joyce in Ulysses. Virginia Woolf avoided obscenity charges against her novel Orlando, based on her lover Vita Sackville West, by skirting overt references to lesbianism. Overall, the willingness to question and experiment opened up literature after the war to new forms and new perspectives.