Place the beef in a mixing bowl, and toss with the flour until evenly coated.
Heat the olive oil in a stew pot over medium-high heat. Take the beef cubes and shake off any excess flour before adding them to the pot. Brown the beef on all sides in the hot oil.
Once browned, pour in the beef broth, water, and the bay leaf. Bring to a simmer, then turn the heat down to maintain a gentle simmer, cover, and cook 1 1/2 hours until the beef is beginning to turn tender.
Stir in the thyme, pepper, carrots, and potatoes. Return to a simmer, and cook until the vegetables are tender, about 30 minutes more.