We develop a set of equations to describe the population dynamics of many interacting species in food webs. Predator-prey interactions are non-linear, and are based on ratio-dependent functional responses. The equations account for competition for resources between members of the same species, and between members of different species. Predators divide their total hunting/foraging effort between the available prey species according to an evolutionarily stable strategy (ESS). The ESS foraging behaviour does not correspond to the predictions of optimal foraging theory. We use the population dynamics equations in simulations of the Webworld model of evolving ecosystems. New species are added to an existing food web due to speciation events, whilst species become extinct due to coevolution and competition. We study the dynamics of species-diversity in Webworld on a macro-evolutionary timescale. Coevolutionary interactions are strong enough to cause continuous overturn of species, in contrast to our previous Webworld simulations with simpler population dynamics. Although there are significant fluctuations in species diversity because of speciation and extinction, very large scale extinction avalanches appear to be absent from the dynamics, and we find no evidence for self-organised criticality.