A hybrid system which forms compatible blends with epoxy resins was developed. The developed hybrid system can be used as a flexibiliser and toughener for acrylic polyol resins. This study demonstrates correlation between adhesion tests, impact resistance tests, differential scanning calorimetry (DSC), and Fourier transform infrared (FTIR) studies. The hybrid systems were prepared by blending an acrylic polyol resin (A) with an epoxy polyol resin (E) in various weight ratios and by applying them on pre-treated cold rolled mild steel panels. The dry film thickness was maintained within the range of 40 to 80 mu m. The panels were allowed to cure under ambient air condition for 1 week prior to testing. The physical, mechanical, structural, and thermal properties were investigated to obtain the best formulation. The blending systems consisting of 10 wt% epoxy resin in 90 wt% acrylic resin and 20 wt% epoxy resin in 80 wt% acrylic resin exhibit good physical and mechanical properties. FTIR spectroscopy showed crosslinking between components of the binders. DSC showed that the T(g) of these binders ranges between 37 to 75 degrees C.