We present a physically-based multiphase model for simulating water and air bubbles with Smoothed Particle Hydrodynamics (SPH). Since the high density ratio of air and water is problematic for existing SPH solvers, we compute the density and pressure forces of both phases separately. The two-way coupling is computed according to the velocity field. The proposed model is capable of simulating the complex bubble flow, e. g. path instability, deformation and merging of bubbles and volume-dependent buoyancy. Furthermore, we present a velocity-based heuristic for generating bubbles in regions where air is likely trapped. Thereby, bubbles are generated on the fly, without explicitly simulating the air phase surrounding the liquid. Instead of deleting the bubbles when they reach the surface, we employ a simple foam model. By incorporating our model into the predictive-corrective SPH method, large time steps can be used. Thus, we can simulate scenarios of high resolution where the size of the bubbles is small in comparison to the liquid volume.