Abstract: In a method of powder metallurgical manufacturing of a composite material containing particles in a metal matrix, said composite material having a high wear resistance in combination with a high toughness, the powder particles (I) of a first powder of a first metal or alloy having a high content of hard particles (HT) dispersed in the matrix of said first powder particles, are dispersed in a second powder consisting of particles (II) of a second metal or alloy having a low content of hard particles dispersed in the matrix of said second powder particles, wherein a mutual contact between the hard particles and/or between the particles of said first powder is substantially avoided, and the mixture of said first and second powders is transformed to a solid body through hot compaction.