Basic theory, historic development and recent applications of physically based models, especially those used at the Soil and Water Management Institute of the Swiss Federal Institute of Technology in Lausanne, are briefly reviewed. Heterogeneity of catchment physical properties, especially that of hydraulic conductivity, is identified as the main cause of the sometimes disappointing results obtained with this type of model. Applications to large catchments without detailed knowledge of physical characteristics is unlikely to give meaningful results. The paper advocates a close feedback between field work and modelling. New mathematical methods are needed to relate model parameterization and field measurable variables. Associated uncertainties and the cost-benefit ratio should be carefully evaluated before physically based modelling is used for engineering applications. These evaluations can be better done on small research catchments, where work should concentrate. lt is argued that research in physically based modelling should be intensified as, for a broad spectrum of problems, there is no alternative in the foreseeable future.