diff --git a/lib/phpunit/readme.md b/lib/phpunit/readme.md
index 5af9c06286e..132c4dbf054 100644
--- a/lib/phpunit/readme.md
+++ b/lib/phpunit/readme.md
@@ -5,22 +5,35 @@ PHPUnit testing support in Moodle
 Documentation
 -------------
 * [Moodle Dev wiki](http://docs.moodle.org/dev/PHPUnit)
-* [PHPUnit online documentaion](http://www.phpunit.de/manual/current/en/)
+* [PHPUnit online documentation](http://www.phpunit.de/manual/current/en/)
+* [Composer dependency manager](http://getcomposer.org/)
 
 
-Installation
-------------
+Composer installation
+---------------------
+Composer is a new dependency manager for PHP projects.
+It installs PHP libraries into /vendor/ subdirectory inside your moodle dirroot.
+
+1. install Composer - http://getcomposer.org/doc/00-intro.md
+2. go to your moodle dirroot and execute `php composer.phar install`
+
+
+PEAR installation (not recommended)
+-----------------------------------
+PEAR is a framework and distribution system for reusable PHP components.
+The packages installed via PEAR are available in all PHP projects.
+
 1. install PEAR package manager - see [PEAR Manual](http://pear.php.net/manual/en/installation.php)
 2. install PHPUnit package and phpunit/DbUnit extension - see [PHPUnit installation documentation](http://www.phpunit.de/manual/current/en/installation.html)
 3. edit main config.php - add `$CFG->phpunit_prefix` and `$CFG->phpunit_dataroot` - see config-dist.php
-4. execute `php admin/tool/phpunit/cli/init.php` to initialise the test environemnt, repeat it after every upgrade or installation of plugins
+4. execute `php admin/tool/phpunit/cli/init.php` to initialise the test environment, repeat it after every upgrade or installation of plugins
 
 
 Test execution
 --------------
-* execute `phpunit` from dirroot directory
-* you can execute a single test case class using class name followed by path to test file `phpunit core_phpunit_basic_testcase lib/tests/phpunit_test.php`
-* it is also possible to create custom configuration files in xml format and use `phpunit -c mytestsuites.xml`
+* execute `vendor/bin/phpunit` (or `phpunit` if you use PEAR) from dirroot directory
+* you can execute a single test case class using class name followed by path to test file `vendor/bin/phpunit core_phpunit_basic_testcase lib/tests/phpunit_test.php`
+* it is also possible to create custom configuration files in xml format and use `vendor/bin/phpunit -c mytestsuites.xml`
 
 
 How to add more tests?