The scattering of water waves by a flexible porous membrane barrier in a two-layer fluid having a free surface is analysed in two dimensions. The membrane barrier is extended over the entire water depth in a two-layer fluid, each fluid being of finite depth. In the present analysis, linear wave theory and small amplitude membrane response are assumed. The porous membrane barrier is tensioned and pinned at both the free surface and the seabed. The associated mixed boundary value problem is reduced to a linear system of equations by utilizing a general orthogonality relation along with least-squares approximation method. Because of the flow discontinuity at the interface, the eigenfunctions involved have a discontinuity at the interface and the orthogonality relation used is a generalization of the classical one corresponding to a single-layer fluid. The reflection and transmission coefficients for the surface and internal modes, the free surface and interface elevations and the nondimensional membrane deflection are computed for various physical parameters like the nondimensional tension parameter, porous-effect parameter, fluid density ratio, ratio of water depths of the two fluids to analyse the efficiency of a porous membrane as a wave barrier in the two-layer fluid. © 2006 Elsevier Ltd. All rights reserved.