The method on this page can be used to patch holes of up to a square foot or so and down to a few inches. This will work in drywall and plaster walls but not in ceilings, the patch would sag if used on a ceiling, causing a bulge in the finished repair. Try the method here to repair large holes in ceilings.
Place a pencil mark about ½inch from the top, bottom and both sides of the hole. Hold a framing square along two marks at a time to draw a square around the damage in the wall.
Cut the square out using a drywall saw on wallboard and a reciprocating or keyhole saw on wood-lath plaster. Cut from the center of the hole, out to each corner.
Score the pencil lines around the hole on wallboard using a drywall knife. Break the jagged pieces off along each side, push in to snap the gypsum and then cut the backing paper to remove it. On plaster use a sharp chisel knife to score the lines and then use a saw to cut the wood lath free.
Cut a piece of drywall, any thickness, measuring 2 or 3 inches larger than the squared hole, along all four sides. If the hole is 4 inches square, then the patch should be 8 to 10 inches square.
Turn the drywall to the back and holding it against the wall, mark the size of the new hole on the patch. To make the patch fit easily without forcing, mark the dimensions to be a little smaller than the square opening in the wall.
Use a straight edge to join the marks on the back of the patch with a pencil line to make a hash pattern. Score each line, completely across the patch, with a sharp drywall knife.
Snap the drywall along each score-line, one at a time, and pull the backing paper and gypsum core away leaving the facing paper attached to the patch like wings.
See the instructions for mixing and handling setting joint compound and mix about a cup of the powdered compound as directed and then thin it with a little more water than recommended to improve bonding with the patch. Apply a thick coat of the mud around the perimeter of the hole, letting it overlap the inner edges and spread out several inches.
Press the drywall patch into the opening. Lightly press the paper wings into the mud so they make good contact all around. Push lightly on the center of the patch to be sure it is seated into the hole and level with the wall, or slightly indented. Don't allow the patch to sit above the wall level, this will create a bulge in the finished repair.
Use a 6 inch joint knife held as shown and squeeze the mud from between the wall and the paper wings of the patch. Work around the perimeter, pressing firmly with the joint knife to squeeze all but a very thin coat of mud from between the paper and the wall. Stroke away from the center of the patch in a radial pattern. Check again to make sure the patch is flush with, or just below the wall surface and let the mud set.
When the first coat is dry, cover the entire patch and surrounding wall with a thick coat of setting joint compound. Let it spread out to overlap the edges of the dry mud underneath.
With a wider joint knife, immediately skim off the excess mud to level out the patch as much as possible. Go over it a couple times with firm pressure to leave a semi-smooth finish, ignore any ridges left by the knife blade.
Let the mud set until hard and cut off any ridges using an upward stroke with the joint knife. Sand any other rough spots using medium sandpaper and wipe the dust away with a damp rag. If the surface has deep scratches or pits in it, apply another coat of setting compound, if it is fairly smooth with only small flaws, go on to the final coat.
When the patch is dry sand off any roughness, wipe off the dust and use ready-mixed joint compound to apply a final coat. As before, apply a thick coat of first and then skim it off to leave a smooth finish. To help level the patch, skim the mud with perpendicular strokes to the pervious coat. If you stroked horizontally with the last coat, stroke vertically with this one.
Allow the mud to dry completely and sand the repair, feathering the edges into the surrounding wall surface. Wipe the dust away with a damp rag before priming and painting.
If you are using flat latex finish paint, you can use it to prime the repair, if you are using semi-gloss or other shiny paint, prime with flat latex or a latex primer first.