Notice first how this chapter begins: He has made us alive (Ephesians 2:1). Paul makes sure that we understand that it is God who gives what we spiritually possess. As for verse 8, it does not matter whether we believe that the pronoun "it" refers to grace or faith; both are gifts of God.
Grace is God's kindness to us, shown or demonstrated by His revealing Himself to us. It might help to think of this in reference to God revealing Himself to Moses in the burning bush before He sent him to Egypt. If God did not freely purpose on the strength of His own sovereign will to reveal Himself, neither Moses nor we would ever find Him. If a person cannot find God on his own, how could he possibly have faith in Him? Satan has deceived us so well that men have only the foggiest idea of what to look for.
Faith—with God as its object—begins and continues as part of His gift of kindness. The gift includes His calling, the granting of repentance, the sacrifice of Christ for our forgiveness, and His giving of His Spirit. It is a complete package of many individual gifts. The gospel is the medium that provides knowledge of the objects of the faith He gives, that is, what we believe and trust in. Paul, perceiving these gifts as a package, uses "grace" as its label. In verses 9-10, he advances to the logical "next step" in God's purpose.
Our works in no way jump-start the process of justification, sanctification, and glorification. All our works, beginning with repentance and continuing through our period of sanctification, depend directly on the freely given kindness and faith God provides. Our God-ordained good works are the result of our response to the gift of faith that God gives. Works, then, are the external evidence of the unseen, internal faith that motivates them. A person could not do them unless God had given the gift of faith beforehand. Good works follow, they do not precede.
II Corinthians 5:17-18 confirms this: "Therefore, if anyone is in Christ, he is a new creation; old things have passed away; behold, all things have become new. Now all things are of God who has reconciled us to Himself through Jesus Christ, and has given us the ministry of reconciliation." This corroborates that it is God working in the person. His work is termed a "new creation." Since nothing new creates itself, we are the workmanship of another. We are God's workmanship. In sum, because of what God does, we cooperate and produce works that He ordains.
The apostle Paul adds to our understanding in Philippians 2:12-13: "Therefore, my beloved, as you have always obeyed, not as in my presence only, but now much more in my absence, work out your own salvation with fear and trembling; for it is God who works in you both to will and to do for His good pleasure." He is not saying that we should work in order to obtain salvation. These verses indicate the continuing use of something one already possesses. They suggest carrying something to its logical conclusion, which is for us to live lives worthy of the gospel, doing the works God ordained, as in Ephesians 2:10.
In Romans 9:9-19, Paul, using Jacob and Esau's pre-birth circumstances as a foundation, provides a clear illustration to show that from beginning to end, the whole salvation process depends upon God's involvement. Jacob, representing those called into the church, received God's love in the form of gifts designed to prepare him for the Kingdom of God. From Esau, representing the uncalled, God has simply withheld His love for the time being.