Numerous problems involving gradient-driven transport processes-e.g., Fourier's and Darcy's law-in heterogeneous materials concern a physical domain that is much larger than the scale at which the coefficients vary spatially. To overcome the prohibitive computational cost associated with such problems, the well-established Distributed Microstructure Model (DMM) provides a two-scale description of the transport process that produces a computationally cheap approximation to the fine-scale solution. This is achieved via the introduction of sparsely distributed micro-cells that together resolve small patches of the fine-scale structure: a macroscopic equation with an effective coefficient describes the global transport and a microscopic equation governs the local transport within each micro-cell. In this paper, we propose a new formulation, the Extended Distributed Microstructure Model (EDMM), where the macroscopic flux is instead defined as the average of the microscopic fluxes within the micro-cells. This avoids the need for any effective parameters and more accurately accounts for a non-equilibrium field in the micro-cells. Another important contribution of the work is the presentation of a new and improved numerical scheme for performing the two-scale computations using control volume, Krylov subspace and parallel computing techniques. Numerical tests are carried out on two challenging test problems: heat conduction in a composite medium and unsaturated water flow in heterogeneous soils. The results indicate that while DMM is more efficient, EDMM is more accurate and is able to capture additional fine-scale features in the solution. (C) 2016 Elsevier Inc. All rights reserved.