I use a needle at least two sizes bigger than the one I used to get gauge, to keep the cast on loose.
1. Using both yarns make a slip knot on the left hand needle. These loops are not counted as part of the cast on.
2. Insert the right hand needle between the first two loops on the left hand needle and pull up a loop of your front colour yarn, as if you were working a knit stitch.
3. Slip the new stitch purlwise on to the left hand needle.
4. Insert the right hand needle between the first two loops on the left hand needle. Make sure you are lifting the back yarn from underneath the front yarn and pull through a loop.
5. Slip the new stitch purlwise on to the left hand needle.
Repeat from 2 to 5 until you have the correct number of stitches remembering to always bring the yarn for the next stitch from underneath.
Drop the slip knot from the needle before joining in the round.