A discrete solvent reaction field model for calculating frequency-dependent molecular linear response properties of molecules in solution is presented. The model combines a time-dependent density functional theory (QM) description of the solute molecule with a classical (MM) description of the discrete solvent molecules. The classical solvent molecules are represented using distributed atomic charges and polarizabilities. All the atomic parameters have been chosen so as to describe molecular gas phase properties of the solvent molecule, i.e., the atomic charges reproduce the molecular dipole moment and the atomic polarizabilities reproduce the molecular polarizability tensor using a modified dipole interaction model. The QM/MM interactions are introduced into the Kohn-Sham equations and all interactions are solved self-consistently, thereby allowing for the solute to be polarized by the solvent. Furthermore, the inclusion of polarizabilities in the MM part allows for the solvent molecules to be polarized by the solute and by interactions with other solvent molecules. Initial applications of the model to calculate the vertical electronic excitation energies and frequency-dependent molecular polarizability of a water molecule in a cluster of 127 classical water molecules are presented. The effect of using different exchange correlation (xc)-potentials is investigated and the results are compared with results from wave function methods combined with a similar solvent model both at the correlated and uncorrelated level of theory. It is shown that accurate results in agreement with correlated wave function results can be obtained using xc-potentials with the correct asymptotic behavior. (C) 2003 American Institute of Physics.