Maintaining proper water balance between the production of water due to reaction and its removal by evaporation is very important for the successful operation of a Polymer Electrolyte Membrane (PEM) fuel cell. Imbalance between the two processes can result in either flooding of the electrodes/ gas channels or the dehydration of the membrane. The water management issue is especially critical for ambient temperature operation of the fuel cell. Several experimental and theoretical studies relevant to water management have been carried out to investigate means of reducing the flooding of electrodes/channels or the dehydration of membrane. Bernardi [9] and Wang et al. [11] have developed theoretical models for the prediction of when flooding/dehydration may take place. In the present study, an improved model is developed which combines the advantages of these two models. The Bernardi [9] model is extended to include mass transfer resistances. Following Wang et al. [11], the Stefan-Maxwell description of multicomponent diffusion is replaced by Fickian diffusion. In addition, water vapour diffusion to both anode and cathode sides is included in the model. The overall model is in the form of a closed-form expression for the critical or threshold or balance current density at which the water production rate and the water vapour evacuation rate are exactly balanced. The model shows that the balance current density is a function of operating conditions, properties of electrode, flow and geometric parameters in the gas channels. It has been validated by comparing the predictions with the experimental data of Tuber et al. [5] and Eckl et al.