Abstract: A water soluble resin obtainable by reacting at least two reactants comprising a polyamine and a urea compound, or at least four reactants comprising a polyamine, a urea compound, a dibasic carboxylic acid compound and a lactam; and then reacting the reaction product with at least one compound selected from among epihalohydrins, .alpha.,.gamma.-dihalo-.beta.-hydrins, glycidyl compounds and isocyanates. The resultant the water soluble resin is useful for making a paper coating composition, such as by being mixing that resin with a pigment and an aqueous binder. The paper coating composition does not generate formaldehyde and can be used to manufacture coated papers exhibiting improved properties including excellent water resistance.