The paper presents numerical simulation of two-phase flow in a heated capillary with evaporation on the meniscus. To solve the problem, a model of evaporation from meniscus was developed in which the dynamics of liquid-vapour interface is described by the Cahn-Hilliard equation. The numerical simulations were performed using commercial software for 2D axially symmetric case. The flow evolution was analysed for different values of heat transfer coefficient at the capillary wall and inlet liquid mass flow rate.