A viscous liquid film flows down along the interior of an annular region under gravity with a countercurrent/cocurrent stream of gas phase adjoining the free surface. The interfacial shear stress effects on the stability of the film flow system in the presence of gas flow has been analyzed for the model that describes the motion for the annular countercurrent/cocurrent gas-liquid two-dimensional falling film. A nonlinear evolution of Benney type describing the film thickness in the presence of gasflow has been derived using long wave theory and lubrication approximation. Linear and weakly nonlinear stability analysis of the evolution equation show that both supercritical stability and subcritical instability are possible for the film flow system in the presence of gas flow. The nonlinear equation has been solved numerically in a periodic domain and the results show that the shape and amplitude of the permanent wave are greatly influenced by the countercurrent/cocurrent gas flow. Copyright © 2007 by ASME.