If a differential equation in a Banach manifold is invariant or quasi-invariant under the action of one or more Lie groups, then its stationary points cannot be isolated, so that classical linearized stability theorem does not apply to it. The first main purpose of this paper is to establish a linearized stability theorem for parabolic differential equations in Banach manifolds which are either invariant or quasi-invariant under actions of a number of Lie groups. The second purpose of this paper is to apply this theorem to analyze stability of stationary solutions of some free boundary problems. In order to apply the abstract result to concrete free boundary problems, Banach manifold made up of certain kind of domains such as simple domains in R n is a fundamental tool which seems to have not been well-studied in the literature yet. Hence in this paper we also make some basic investigation to a such manifold. In Section 5 we use Nash-Moser implicit function theorem to prove an interesting result for an obstacle problem which says that if the domain Ω of this obstacle problem is a small perturbation of a sphere then its interface Γ is smooth and depends on Ω smoothly. By using these results, in the last section we prove asymptotic stability of radial stationary solution of a free boundary problem modeling the growth of necrotic tumors, which has been kept open for over ten years.