A mathematical model to analyze the stability of the two-phase flow in a generalized steam generator is developed. A counter flow heat exchanger in which a high temperature primary fluid heats and vaporizes a lower temperature secondary fluid is considered as the system. The governing equations of this system is obtained by using the transient field equations, constitutive relations, boundary conditions and the initial conditions of both the primary and the secondary fluids. The governing equations of the secondary fluid are decoupled from the equations of the primary fluid by determining a heat flux profile and superimposing it on the wall of the channel of the secondary fluid. With this superimposed heat flux profile an equivalent system is obtained which utilizes the fundamental equations of the secondary fluid to analyze the stability of the flow. To investigate the stability of the system, a relation between the variation of the inlet velocity and the variation of the total channel pressure drop is needed. The Laplace transform of this relation is called the transfer function of this system and is obtained by using a small perturbation technique and linearization. Liapunav's theorem is used to investigate the stability of the nonlinear system from linearized system. The theoretical predictions of this model are observed to be in agreement with experimental results.