Two-way relay channel (TWRC) models a cooperative communication situation performing duplex transmission via a relay station. For this channel, we have shown previously that a lattice-based physical layer network coding strategy achieves, at the limit of arbitrarily large dimension, the same rate as that offered by the random coding-based regular compress-and-forward. In this paper, we investigate a practical coding scheme using finite dimension lattices and offering a reasonable performance-complexity trade-off. The algorithm relies on lattice based quantization for Wyner-Ziv coding. We characterize the rate region allowed by our coding scheme, discuss the design criteria, and illustrate our results with some numerical examples.