Large-eddy simulation (LES) has become a well-established tool in the atmospheric boundary-layer research community to study turbulence. It allows three-dimensional realizations of the turbulent fields, which large-scale models and most experimental studies cannot yield. To resolve the largest eddies in the mixed layer, a moderate grid resolution in the range of 10 to 100 m is often sufficient, and these simulations can be run on a computing cluster with few hundred processors, or even on a workstation for simple configurations. The desired resolution is usually limited by the computational resources. However, to compare with tower measurements of turbulence and exchange fluxes in the surface layer a much higher resolution is required. In spite of the growth in computational power, a high-resolution simulation LES of the surface layer is often not feasible: to fully resolve the energy containing eddies near the surface a grid spacing of O(1 m) is required. One way to tackle this problem is to employ a vertical grid nesting technique, where the surface is simulated at the necessary fine grid resolution, and it is coupled with a standard, coarse, LES that resolves the turbulence in the whole boundary-layer. We modified the LES model PALM (Parallelized Large-eddy simulation Model) and implemented a two-way nesting technique, with coupling in both directions between the coarse and the fine grid. The coupling algorithm has to ensure correct boundary conditions for the fine grid. Our nesting algorithm is realized by modifying the standard third order Runge-Kutta time stepping to allow communication of data between the two grids. The two grids are concurrently advanced in time while ensuring that the sum of resolved and subgrid-scale kinetic energy is conserved. We design a validation test and show that the temporal averaged profiles from the fine grid agree well compared to the reference simulation with high-resolution in the entire domain. The overall performance and scalability of the nesting algorithm is found to be satisfactory. Our nesting results in more than 80 percent savings in computational power for 5 times higher resolution in each direction in the surface layer.