Comment posted to Learning to Plaster by Plastering and Struggling with Drywall by Nate.

Another solution. I am assuming that you have a brick, cinderblock or some other type of masonary wall. Just extend the walls via 3/8 inch drywall sheets. No one will notice. Remove all molding from walls or room. Sand and plaster the wall just enough to get out the main irregularities. Don’t worry about trying to get it exact. Just as long it basically smooth. Correct of all flaking areas Then prime it with a good paint that will take an adhesive. Then get some sheets of 3/8 inch drywall and paste it on top with a good adhesive. Screw in a couple of flathead masonary screws for extra holding. Problem solved and your wall is much smoother than you could ever get it via plastering. This solution is especially useful if you want to get rid of textured or stuccoed walls.

Or a better solution depending on room

Get some good qaulity 1×3′s or 2×4′ s and build a frame separately. Then lay frame up against wall. Shim the irregular areas and attach to wall via masonary screws.. Throw up your 1/2 inch sheet rock. Done deal!. This solution will also permit you to run wiring behind walls.

The Stanley Complete Drywall book is also useful to have.
Only a few bucks via Amazon.

Nate