The nonlinear Kelvin-Helmholtz stability of the cylindrical interface between the vapour and liquid phases of a fluid is studied when the phases are enclosed between two cylindrical surfaces coaxial with the interface, and when there is mass and heat transfer across the interface. The method of multiple time expansion is used for the investigation. The evolution of amplitude is shown be governed by a nonlinear first-order differential equation. The stability criterion is discussed, and the region of stability is displayed graphically.