This paper presents numerical simulation of mixing of argon- and water-plasma species in an argon–steam arc discharge generated in a thermal plasma generator with the combined stabilization of arc by axial gas flow (argon) and water vortex. The diffusion of plasma species itself is described by the combined diffusion coefficients method in which the coefficients describe the diffusion of argon ‘gas,’ with respect to water vapor ‘gas.’ Diffusion processes due to the gradients of mass density, temperature, pressure, and an electric field have been considered in the model. Calculations for currents 150–400 A with 15–22.5 standard liters per minute (slm) of argon reveal inhomogeneous mixing of argon and oxygen–hydrogen species with the argon species prevailing near the arc axis. All the combined diffusion coefficients exhibit highly nonlinear distribution of their values within the discharge, depending on the temperature, pressure, and argon mass fraction of the plasma. The argon diffusion mass flux is driven mainly by the concentration and temperature space gradients. Diffusions due to pressure gradients and due to the electric field are of about 1 order lower. Comparison with our former calculations based on the homogeneous mixing assumption shows differences in temperature, enthalpy, radiation losses, arc efficiency, and velocity at 400 A. Comparison with available experiments exhibits very good qualitative and quantitative agreement for the radial temperature and velocity profiles 2 mm downstream of the exit nozzle.