A modal expansion method for modelling dynamic space-dependent effects (xenon oscillations) in large nuclear reactors is presented. Based on the finite element method (FEM), modal expansion functions for various cases with practical significance can be calculated. In this way it is possible to derive a low order state space model describing the considered effect. The use of this model in on-line controller design and simulation is intended. Modal methods in connection with modern numerical algorithms turned out to be effective to treat distributed parameter systems governed by elliptic differential equations. This will be demonstrated by application to a VVER-1000 pressurized water reactor.