The finite element formulation for deformation of porous materials including compressibility of the material and the effect of temperature was developed and applied to the problem of plane-strain compression of sintered iron-power bars. The formulation employed a phenomenological approach for the deformation analysis. A simple linear relationship between the thermal conductivities of the powdered metal and the base metal was derived and used as a first approximation for temperature calculations. The computed results are compared with experimental values in terms of macroscopic densification and forging pressures.