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The diferential equations governing two-phase flow through a porous medium are derived and the space discretization is carried out by the Galerkin finite element method. An examination of the eigenvalues of the resulting system follows in order to decide on a suitable stability criterion to be satisfied by the time-stepping algorithm. A class of time-stepping schemes is introduced and their behaviour when applied to a specific problem is analyzed. The aim is to achieve an adequate modelling of the water-oil interface and to preserve reasonable values of the capillary pressure. A technique to clustering the mesh around the interface is used to improved the modelling, and a boundary condition based on the relative mobilities of the two fiuids is imposed to enable the program to calculate the water-oil ratio after breakthrough. The effect of lumping the mass matrix is then examined with a view to reducting the surge in the values obtained for the capillary pressure. Finally an optimum method is suggested for use as a starting algorithm for more sophisticated time-stepping schemes.