Remove the damaged plaster and crumbling pieces, creating a clean hole. Seal the surrounding area with primer-sealer to prevent additional water damage. This will ensure a good bond with the new sealer.
Mix the floating-joint compound to create the "mud." If it is a small repair, use a 30-minute setting compound. For larger areas use a longer setting compound. A floating-joint compound is a powder that you will mix with water in a 2 to 1 ratio. The "mud" should be thick enough to stick to the large joint knife while hung upside down. Collect the mixture into the mud pan.
Spread the mud over the hole with the large joint knife; fill the hole until it is overflowing. Take the doorstop molding or piece of wood and spread it over the mud until it is smooth. Leave the patch flush with or just below the surrounding area. Make sure there are no lines left from the using the doorstop molding. Finally, skim the mud onto the surrounding area as thinly as possible to blend with the non-damaged plaster wall. Let the mud set and smooth out the surface, using the large joint knife to flake off any clumps.
Mix another small batch of mud and apply a skim coat (thinner coat) over the patch and overlapping onto the non-damaged wall. Smooth out this surface with the joint knife at about 30 degrees, using parallel strokes. Leave the ridges. Let the mud set and then scrape off the ridges
Create another skim coat with additional mud. Apply the coat in the opposite direction of the previous coat. Do so until the repair is smooth. This may be upwards of five coats. With the final coat, mix the ready-mixed joint compound and apply a final coat over the patch. This final coat will be easier to sand.
Tear an 8X11 inch sheet of 120 grit sandpaper in half and then fold it in half. Apply even pressure with your fingers splayed out across the sandpaper. Use wide arching strokes, being careful of the outside of the patch, which is more delicate. Create a smooth transition from the outside patch to the center. Once the patch is smooth and even, wipe with a damp rag. You can now prime and paint the wall.