Remove damaged areas. Using a putty knife, scrape off the loose bits and parts including bubbled areas, peeling paint and cracked plaster. Be sure to scrape off the surrounding areas, too. Dust off any excess debris.
Apply primer. Apply shellac-based primer sealer or alkyd wall primer to the entire scraped area or areas. Shellac primer will dry in about one hour, whereas alkyd primer will dry in about 12 hours.
Apply joint compound. Fill out any holes or cracks that occur after scraping by applying thin layers of joint compound. Use a joint knife to smooth out the surface. Apply several skimmed layers after each layer dries. The compound or mud will take 30 minutes to an hour to dry.
Use a hand sander with medium-coarse sand paper, such as 120 grit, to sand out rough patches. Then clean with a wet rag and let dry.
Apply primer again. Apply primer-sealer to protect against moisture damage.
Paint the newly repaired area using the same color as the rest of the wall or ceiling.