In 1868, despite her parents' objection, she began a relationship with the progressive architect-designer and essayist Edward William Godwin, another man whose taste she admired, whom she had met some years before. They retreated to Pigeonwick, a house in Harpenden, where she retired from acting for six years. Terry was still married to Watts, not finalising the divorce until 1877, so she and Godwin could not marry. However, they had a daughter, Edith Craig, in 1869 and a son, Edward Gordon Craig, in 1872. The surname Craig was chosen to avoid the stigma of illegitimacy, but their cohabitation and children born out of wedlock were considered scandalous situations at the time.