Recent advances in cooperative communication and wireless Network Coding (NC) may lead to huge performance gains in relay systems. In this context, we focus on the two-way relay scenario, where two nodes exchange information via a common relay. We design a practical Superposition Coding (SC) based NC scheme for Decode-and-Forward (DF) half-duplex relaying, where the goal is to increase the achievable rate. By taking advantage of the direct link and by providing a suboptimal yet efficient power division among the superposed layers, our proposed SC two-way relaying scheme outperforms the reference schemes, including the well-known 3-step DF-NC scheme and the capacity of 2-step schemes for a large set of SNRs, while approaching closely the performance bound. Copyright © 2010.