When modelling the phenomenon of strain localisation in strain-softening soils with the finite element (FE) method, nonlocal approaches have been commonly employed to avoid mesh dependency and numerical instability. This paper first presents the FE formulation of a critical state model for highly overconsolidated clays incorporating a nonlocal method. The performance of the nonlocal strain regularisation is subsequently assessed through a series of coupled hydro-mechanical (HM) analyses of undrained and drained triaxial compression tests on London clay. The mechanism behind the evolution of strain localisation in triaxial tests is investigated and a comparison with equivalent plane strain analyses is discussed. Finally, a comprehensive sensitivity study is presented, investigating the influence of the two nonlocal parameters, in the adopted nonlocal algorithm, on the predicted stress–strain responses. A key outcome is the derived linear relationship between the two parameters, which enables a unique stress–strain response to be achieved in either axisymmetric or plane strain analyses with multiple combinations of the two parameters. Such a modelling capability is essential in applications of the proposed nonlocal strain regularisation in large scale boundary value problems in which restrictions on element size exist.