Our house is 150+ years old, and someone years ago did a good job of putting mortar on the interior of the limestone basement walls.
Now all that mortar is coming loose, bats are building nests behind it, and it needs maintenance. Is removing it all and reapplying mortar the best treatment? Foundation is in good shape otherwise.
Do you have any idea why the mortar is falling off? Can you determine if it is a lime based mortar or portland based mortar? Was it applied directly to the stone or is it on wire lath? Is it really a necessity to have the cement finish? Is this a leaky basement?
There are a lot of considerations. Maybe a picture would help also.
Also, your location could be an issue....so where are you?