  Within protogalaxies, thermal instability leads to the formation of a
population of cool fragments, confined by the pressure of residual hot gas. The
hot gas remains in quasi-hydrostatic equilibrium, at approximately the virial
temperature of the dark matter halo. It is heated by compression and shock
dissipation and is cooled by bremsstrahlung emission and conductive losses into
the cool clouds. The cool fragments are photoionized and heated by the
extragalactic UV background and nearby massive stars. The smallest clouds are
evaporated due to conductive heat transfer from the hot gas. All are subject to
disruption due to hydrodynamic instabilities. They also gain mass due to
collisions and mergers and condensation from the hot gas due to conduction. The
size distribution of the fragments in turn determines the rate and efficiency
of star formation during the early phase of galactic evolution. We have
performed one-dimensional hydrodynamic simulations of the evolution of the hot
and cool gas. The cool clouds are assumed to follow a power-law size
distribution, and fall into the galactic potential, subject to drag from the
hot gas. The relative amounts of the hot and cool gas is determined by the
processes discussed above, and star formation occurs at a rate sufficient to
maintain the cool clouds at 10$^4$ K. We present density distributions for the
two phases and also for the stars for several cases, parametrized by the
circular speeds of the potentials. Under some conditions, primarily low
densities of the hot gas, conduction is more efficient than radiative processes
at cooling the hot gas, limiting the x-ray radiation from the halo gas.
