An inverse problem is formulated to determine water capacity of porous media. Mathematical model of the problem involves a nonlinear parabolic equation in which the coefficient representing water capacity is unknown and to be determined from over specified data measured on the boundary. By using polygonal approximation for the unknown coefficient and by eliminating it in the equation using over specified data, the problem is transformed into the standard nonlinear initial boundary value problem. This problem is solved by the finite difference method and unknown coefficient is determined from the numerically obtained solution. A numerical procedure and examples are presented. (C) 2000 IMACS/Elsevier Science B.V. All rights reserved.