Abstract: A method is provided for the formation of liposomes of 0.1 &mgr;m to 50 &mgr;m in diameter having unilamella or multilamella structure and containing water insoluble or undissolved particulate materials comprising (a) forming liposomes and removing substantially all of any organic solvent used in their preparation, (b) freeze drying the liposomes so formed and then (c) rehydrating them in intimate admixture with the particulate material. Preferred encapsulated materials are particulate materials, most preferably microorganisms, plant or animal cells or water insoluble structures having organic solvent labile biochemical or immunological activity, but any water insoluble particulate may be encapsulated using the method. For example catalysts or drugs that are sparingly soluble may also be so incorporated such that slow release into the a patients body may be provided while release of detergents included in the many liposome preparation protocols may be avoided.