The article presents the results of the investigation of pastes and cement mortars, modified with lime and cellulose ether. Rheological measurements of pastes included yield stress and plastic viscosity. For mortars, bulk density, air content, shrinkage and water retention were determined. The setting and hardening process was investigated by the ultrasonic method, with the compressive strength measurments. The test results confirmed the beneficial effect of hydrated lime and cellulose ether addition on the properties of fresh plaster. The addition of cellulose ether increased the water retention coefficient by at least 10%, compared to mortars without cellulose ether. The effect of cellulose ether on water retention in the mortar was more significant than that of hydrated lime. Both cellulose ether and/or hydrated lime causes setting retardation as well as decrease of the hardening rate. Compressive strength is decreased while shrinkage deformation is reduced.