I believe you're looking for the "Upload & Review" module...
http://cdc.humboldt.edu/moodle/course/view.php?id=3&topic=4%20alt=Assignment%20Types
I've installed it on my server and have had pretty good success. With one of my teachers, though, it's had an issue with uploading the edited word document. I'm not entirely sure if it's the module's fault, moodle's fault, or the OS's fault. Perhaps the document gets mangled somewhere along the way.
Assignment
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