Variational multiscale method (VMS) is a new framework of stabilized finite element method that can be applied to the various regimes of fluid flow problems, namely laminar or turbulent flows, without any a prior knowledge of flow field. It is also based on the scale separation, for fully resolved and unresolved sub-grid scales which is being used in large-eddy simulation of turbulent flows. In this paper the VMS technique is applied to the free-surface flows. In order to simulate two phase flow of air-water mixture, the governing equation is expressed in dimensional form, and the VMS formulation is presented for the air-water mixture. Fully-filled and half-filled water tank is calculated under hydrostatic condition in order to check the validity of the current formulation. Dam-break problem with an obstacle is to be tested for the validity of the current approach.