Physical systems are often most systematically modeled using a mixed set of Differential and Algebraic Equations (DAEs). However, high index DAE systems which possess identically singular algebraic constraints can present a number of problems in simulation and control. A key difficulty with these systems is that they are not expressed in an explicit state space representation. This paper describes a new modeling approach based on singularly perturbed sliding manifolds for developing state space realizations of high index DAE systems. The new method is illustrated for a model of a two phase flow heat exchanger.