The wave-induced dynamic response and instability of the porous seabed and the rubble mound foundation under a composite caisson-type breakwater is studied using finite elements. In this study the focus is on the effect of inertial terms on the dynamic response and instability of the foundation material underneath the breakwater. It is assumed that a fully standing wave condition occurs in front of the caisson under the cyclic wave action and the dynamic response of the seabed and rubble mound is presented in terms of pore pressures and stresses induced around the breakwater. A complete formulation of the fully dynamic (FD) response requires inclusion of the inertial terms associated with both the motion of solid skeleton and that of pore fluid. However, partly dynamic (PD) and quasi-static (QS) idealizations are also possible. The objective of this study is to investigate the standing wave induced dynamic response and instability of seabed-rubble-breakwater system.