So, how do I fix this water damaged wall?

[Axis of Weasel]

As you can see, the damage is rather extensive, about 3' across and a 1.5' high.

I think that that's plaster underneath the paint, but I'm unsure what's underneath plaster. It does not appear to be concrete, as it breaks up rather easily into sandy bits.

Can I just break off the loose plaster and apply fresh plaster directly? Is there a bonding material I should use before I use plaster?

Please keep in mind I'm completely new to home repair; heck, I've never owned a house.

Thanks

Sorry, I cant link to other sites since im a n00b.

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[HayZee518]

early walls were made of studs covered by rough wooden lath spaced about 3/8" apart and nailed to the studs. soon after wood in the more "well to do" houses, metal lath [expanded metal" screening was used. the metal was not coated so it rusted.
the bottom coat in a wall was a simple stucco cement with entrained horsehair as a binder. the cement was pressed into the lath to form "keys" on the backside to hold the material on the walls. the topcoat was plaster of paris without a binder. you had to work quickly with it because it cured very fast and dried rock hard. additional gypsum was added to extend its work-a-bility. it was very hard to sand. now a days regular sheetrock mud with a can of flat white paint added into it works nicely. there are other additives that can be added. a product that is made for model railroaders for mountains etc is also added to basic sheetrock mud. the name hydrocele or hydropour comes to mind but I am not sure of the name.