Highly water-soluble polymer such as PVP was used to stabilize colloidal suspensions of active rhodium particles and to perform catalytic hydrogenation of oct-l-ene in a two liquid phase system. The effects of various parameters on the stability and activity of these nanoparticles under more or less severe conditions have been investigated. Experiments show that PVP-Rh colloids can be reused twice or more at 50 degreesC and 0.3 MPa without losing activity. Much higher turnover than with usual biphasic catalysis were performed. The MET micrographs of the catalytic phase of the PVP-Rh system: before and after hydrogenation shows two nanometer particles containing rhodium oxide and metallic rhodium. IR and NMR spectroscopy analysis of the colloids shows geminal and terminal Rh-CO species with a preponderance of the geminal ones. The kinetics of biphasic hydrogenation and simultaneous isomerisation of oct-l-ene have been studied in the presence of ethanol cosolvent, using low concentrations of PVP-Rh colloids. The rate was found to be first order with respect to catalyst and olefin concentrations and hydrogen pressure. A kinetic model was fitted to the observed data, and was found to predict the rates with a good agreement. The activation energy was found to be as low as 3.4 kcal/mol suggesting the reaction to be limited by diffusion of oct-l-ene through the protective polymer layer.