Ephesians 2:8 For by grace you have been saved through faith, and this is not from you; it is the gift of God;
Ephesians 2:9 it is not from works, so no one may boast.
Ephesians 2:10 For we are his handiwork, created in Christ Jesus for the good works that God has prepared in advance, that we should live in them.
vatican.va/archive/ENG0839/__P109.HTM
These are verses that I myself have been confronted with when discussing justification with Christians who hold to the faith alone belief promulgated by the Protestant reformers. I believe in Catholic theology myself, and the verse in question can be explained to our Protestant brothers and sisters in Christ in the context of the infallable teachings of the Magesterium of the Catholic Church as well as the divine public revelation of Sacred Tradition.
A good way to start is to explain that the first verse starts out saying that we are saved by grace, it doesn’t say that we are saved by faith alone. We cannot be saved by faith alone as James 2:24 tells us:
James 2:24 See how a person is justified by works and not by faith alone.
vatican.va/archive/ENG0839/__P11W.HTM
The first verse in Ephesians continues by saying that it is through faith that we are saved by grace. This is an important detail not to be overlooked. Everything is by God’s grace, our birth, our death, our good works, our salvation, everything. But this does not mean that we do not have our own part as well, we have to actually make the decision whether or not to go along with God’s grace. Therefor it is true that it is through our faith that God’s grace saves us, but what is faith? Here we can turn to the Catechism of the Catholic Church for the answer:
Faith
1814
Faith is the theological virtue by which we believe in God and believe all that he has said and revealed to us, and that Holy Church proposes for our belief, because he is truth itself. By faith "man freely commits his entire self to God."78 For this reason the believer seeks to know and do God’s will. “The righteous shall live by faith.” Living faith "work(s) through charity."79
1815 The gift of faith remains in one who has not sinned against it.80 But “faith apart from works is dead”:81 when it is deprived of hope and love, faith does not fully unite the believer to Christ and does not make him a living member of his Body.
1816 The disciple of Christ must not only keep the faith and live on it, but also profess it, confidently bear witness to it, and spread it: "All however must be prepared to confess Christ before men and to follow him along the way of the Cross, amidst the persecutions which the Church never lacks."82 Service of and witness to the faith are necessary for salvation: "So every one who acknowledges me before men, I also will acknowledge before my Father who is in heaven; but whoever denies me before men, I also will deny before my Father who is in heaven."83
79 ⇒ Rom 1:17; ⇒ Gal 5:6.
80 Cf. Council of Trent (1547): DS 1545.
81 ⇒ Jas 2:26.
82 LG 42; cf. DH 14.
83 ⇒ Mt 10:32-33
vatican.va/archive/ENG0015/__P66.HTM
So we see that faith is not only believing in God but also believing all that He has said and revealed to us, and that Holy Church proposes for our belief. This would include the necessity of works for our salvation, baptism and the other sacraments also being necessary for salvation as well etc.
Also, we must remember not to read any verse(s) of Sacred Scripture out of context, and also that all of the Bible needs to be read and understood as a totalitarian book, that is to say the Bible is one single part of God’s public revelation, and is to be studied as such. This means we as Christians must study Bible verses within the context of the entire Bible, not just within the context of individual books or the just the verses themselves.
When we read chapter 2 of Ephesians we see that Saint Paul is speaking about circumcision, and how we no longer need to be circumcised in order to be Christians. He is also trying to point out that we cannot be justified before God on our own, that is by works alone, we need faith as well. Saint Paul was combating one heretical extreme, justification by works alone, Saint James combated another heretical extreme, justification by faith alone.
So we can see that when we understand what exactly faith means, as well as the overall context of the verses in question, we can understand what exactly Saint Paul was trying to convey to the readers of the letter to the Ephesians and how it applies to us today.
The verses in Ephesians in no way contradict Sacred Tradition or the Magesterium’s teaching of Faith plus Works, and do not support the Protestant belief in Faith Alone when studied and interpreted correctly, according to the way God had originally intended them to be understood.
I hope that helps.
May God bless you and Mary keep you in her prayers always.
YinandYang