In British nautical use, "ensign" has a specific meaning: it is the name of a flag having a red, white or blue ground, with the Union Jack in the upper corner next the staff.
Since the reorganisation of 1864, the white ensign (which is sometimes further distinguished by having St George's Cross quartered upon it) is only used in the Royal Navy and the royal yacht squadron, while the blue and red ensigns are the badges of the naval reserve[?], some privileged companies, and the merchant service[?] respectively.
Prior to 1864, red, white and blue were the colours of the principal squadrons, which were created as a result of the reorganisation of the navy in 1652 ? by Admiral Robert Blake.
The red squadron tended to patrol the Caribbean and north Atlantic, the white the coasts of Britain, France and the Mediterranean, while the blue patrolled the south Atlantic, Pacific and Indian oceans. The flags of the various former British colonies often have grounds of the same colour as their protective squadron. Hence Bermuda has a red ground and Australia blue.
In addition to the Admiral of the Fleet, each squadron also had its own Admirals:
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