For a house of that vintage, current thinking is to avoid barriers/tanking etc.
Remove the plaster from that wall. Re-plaster with lime putty & sand. Skim with fine lime putty.
It's the way it was always done in the past. Whilst I'm a big fan of new products and systems, properly "breatheable" lime plaster is a perfect solution. Any moisture in the wall will "wick" out into the room. I've done this many times. Often after others have applied various tanking systems which only lock moisture into the wall. It's better if it can escape.
Very important to use old-fashioned type non-vinyl paint afterwards. There's a good choice around these days.