The purpose of this work is to evaluate the improvement in physical stability of polymer coated liposomes. Small unilamellar liposomes (dimilistoylphosphatidylcholine (DMPC): dicetyl phosphate (DCP): cholesterol (Chol)=7:3:1) 100 nm in diameter were coated with polyvinyl alcohol (PVA) and a modified PVA, which bears a long alkyl chain at the end of molecule (PVA-R), by simply mixing the liposomal suspension with the polymer solutions. Changes in particle size and zeta potential for the polymer coated liposomes confirmed the existence of a thick polymer layer on the surface of liposomes, especially for the PVA-R coated liposomes. The amount of PVA-R coating increased with increasing polymer concentration, and the estimated molar ratio of PVA-R coating to phospholipids in the liposomes was 1/120 at the highest polymer concentration (2%). The physical stability of polymer coated liposomes was evaluated by measuring the change in particle size and the retention of entrapped contents after perturbing the system with freeze-drying and followed by rehydration (FD-RH). PVA-R coated liposomes showed almost complete retention of particle size and a larger entrapped content, while a dramatic increase in particle size and a reduction in the percentage entrapped, which suggested the occurrence of aggregation and fusion of liposome particles during FD-RH, were observed for non-coated and PVA-coated liposomes. Aggregation of liposomes in calf serum was effectively prevented by coating liposomes with PVA-R.