hi,usally you would just cut away the bottom 12" or so,or however high the damp is rising,but then depending on what cracks are showing on the wall it may need to be all re-rendered??,otherwise just the lower part inside and out ,and treated with a brush application for water proofing.
if re-rendering all the rear again,it may pay to take the old off first,and uni-bond it all,or waterproofing agent,then render.
garry
October 2010