William Webster was the son of John Webster, labourer, and his wife Elizabeth, née Poynton. One of a large family, William left school at 13 to work in the Welsh quarries. In New South Wales he quarried stone at Pyrmont. By 1880 he was prominent in the Quarrymen's Union of New South Wales and financial secretary of the Trades and Labor Council.
In a varied career, Webster was an instigator, member and chairman of the royal commission on postal services (1908-10). Webster was appointed postmaster-general in 1915 in the first government of Labor prime minister, William Hughes. In 1916 Webster left the Australian Labor Party over conscription: as one of the twenty-four ex-members who joined Hughes in the National Labor government, he retained his portfolio until 3 February 1920. Webster successfully impeached the Department of Works for waste and extravagance in developing the Federal capital. He was defeated in the December 1919 election.