The variational problem on the equilibrium of a two-phase elastic medium is given in an extended form and is compared with the standard setting. The lower semicontinuity of the energy functional in the extended formulation is studied, and an example is constructed where no equilibrium states exist for a special class of residual strain tensors. In the case of isotropic media, a method is described for finding equilibrium states in explicit form. The notion of temperatures of phase transitions is introduced, their existence is proved, and their properties are studied.