The main goal of the present project is the further development and validation of a new computational fluid dynamics (CFD) method using a combination of grid-free (particles) and grid-based techniques. A fundamental assumption of this novel approach is the decomposition of any physical quantity into the grid based (large scale) and the fine scale parts, whereas large scales are resolved on the grid and fine scales are represented by particles. Dynamics of large and fine scales is calculated from two coupled transport equations one of which is solved on the grid whereas the second one utilizes the Lagrangian grid free Vortex Particle Method (VPM).