Two-phase bubble formation coupled with phase change at a submerged nozzle is studied theoretically. The whole bubble consists of a vapor and a liquid phase. The inner vapor phase is assumed to be surrounded by a thin condensate layer, in which the vapor condenses partially as the two-phase bubble grows. The interface element approach is applied to describe the dynamics of bubble formation. The effect of heat transfer from bulk vapor within the bubble to the surrounding bulk liquid is related to pressure analysis of vapor within the two-phase bubble via the mass flux of condensation. The results computed from this model agree well with the experimental data.