Advanced Heavy Water Reactor (AHWR) is a vertical pressure tube type boiling water reactor that relies on two-phase natural circulation for heat removal from the nuclear core under normal operating as well as accidental conditions. In case of AHWR, the two-phase flow generated in the core is transported by vertical riser pipes to horizontal steam drums at the top. These horizontal steam drums provide sufficient surface area for the separation of steam water mixture purely based on gravity i.e. due to density difference between steam and water.To investigate this gravity separation phenomenon, an experimental facility known as Air-Water Loop has been designed. The facility has a scaled geometry of AHWR steam drum operating with Air-Water mixture as a working fluid. The required flow conditions for the experimental simulations are generated using air-water two-phase natural circulation in this facility. Steady state natural circulation experiments were performed where measurements on recirculation flow rates, two-phase and single phase pressure drop in various sections of the loop have been carried out. The present paper aims to describe the design aspects of the facility, pre-test calculations,steady state two-phase natural circulation experiments and assessment of measured experimental data. The experimental measurements have been predicted using a numerical model that considers various void fraction and pressure drop correlations from the literature for estimation of measured parameters.