It is possible to save water-damaged plaster if it was exposed to only clean water, but this will depend on how wet it got and if the lath below was damaged. If you see that the lath is pressing the wall out, it is probably made of wood and became warped. This must be repaired, not dried out. If the lath is made of metal, it must be replaced due to possible rust. A crumbling wall has to be fixed as well.
Chip loose or damaged plaster away from the wall with the claw end of a hammer. Check the lath underneath for damage. If it seems OK, leave it exposed to air for a few days to make sure it dries out. If it is damaged, cut it out with a small saw or metal snips, depending on the type.
Cut a new piece of metal lath that will fit the hole, using the metal snips or saw, and nail it in place with the hammer. Cut a second piece and nail it over the first.
Dampen the area around the hole with a damp cloth. It doesn't seem like the thing to do with water damage, but it will help the new plaster stick to the old.
Fill the hole with a layer of plaster that will cover the lath completely but not fill the hole. Use a spackling knife to apply the plaster. Let this dry completely. The length of time required for drying will depend on the type of plaster being used. Try to match the type of plaster to the old plaster if possible.
Fill the hole with another layer of plaster to bring it even with the rest of the wall. Spread the plaster over the old wall by several inches to smooth it over and make it look like a complete wall. Let this dry before applying any paint or other finishing material.