The linear analysis of hydro-magnetic capillary instability of a cylindrical interface between two viscous and magnetic fluids in a fully saturated porous medium has been carried out, when the fluids are subjected to a constant axial magnetic field and, when there is heat and mass transfer across the interface. The viscous potential flow theory has been used for the investigation. Viscosity enters through normal stress balance in the viscous potential flow theory and tangential stresses are not considered. A dispersion relation that accounts for the growth of axisymmetric waves is derived and stability is discussed theoretically as well as numerically. Stability criterion is given by critical value of applied magnetic field as well as critical wave number. Various graphs have been drawn to show the effect of various physical parameters such as magnetic field strength, heat transfer capillary number, vapour fraction, permeability and porosity on the stability of the system. It has been observed that heat transfer and magnetic field both have stabilizing effect while porosity has destabilizing effect on the stability of the system.