A fast and numerically accurate model for monochromatic transfer in scattering atmospheres has been developed to extend the capabilities of the existing LBLRTM line-by-line model to the treatment of clouds and aerosols. The algorithm is based on the adding-doubling method and is specifically designed to perform radiance calculations in both the thermal and the solar regimes using any specified number of computational streams. The efficient implementation of the adding-doubling scheme makes it possible to use the multiple-scattering algorithm in retrieval applications, an essential requirement for the intended use of the algorithm in atmospheric validation studies. The algorithm is applied to observations of water clouds from the ground-based high spectral resolution atmospheric emitted radiance interferometer (AERI) made during the daytime. Retrieval of cloud mode radius, cloud liquid water, and effective cloud fraction is required to model the AERI radiance measurements in the 520--1500 cm-1 band and in the 1800--3020 cm-1 band which contains significant scattered solar energy. An initial assessment is made of the spectral information content of the AERI measurements for water cloud properties and of the quality of the spectral fits obtainable with those three parameters in the two spectral bands.¿ 1997 American Geophysical Union