Magnetic nanocomposites containing iron oxide particles embedded in a polymer matrix have been synthesized using the method of ion exchange. They have been characterized by using low temperature and room temperature magnetic measurements and Mossbauer spectroscopy. The iron content in these samples has also been determined. The results have been analysed and explained. The physical and chemical properties of these nanocomposite materials are different from those of the bulk. Some of the unique properties of these materials find application in information storage, color imaging, ferrofluids and magnetic refrigeration.