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A qualitative reasoning environment for modelling and simulation of dynamic physical systems (QREMS) has been developed. This environment integrates qualitative reasoning (deKleer 1984; Kuipers 1984; Forbus 1984), bond graphs (Karnopp and Rosenberg 1983) 1983) and fuzzy logic (Linkens 1992). Conceptual, causal and numerical models are defined and three levels of analysis using these models are performed. Some new concepts, such as parsimonious model, qualitative stability and structural model or physical model, are put forward and based on these concepts, new approaches of parsimonious model construction, qualitative stability detection and physical model based control are explored. Three case studies are presented.