A water dispersible coating composition is prepared by reacting together at elevated temperature in the presence of an amine 40 to 90% by weight of an epoxy resin composition of average epoxy functionality 1.0 to 2.0 epoxide groups per molecule and 10 to 60% by weight of a polymer containing carboxylic acid groups. The ratio of carboxylic acid groups to epoxide groups is 1.5:1 to 20:1. The reaction is carried out in a mixture of a water miscible organic solvent with 5 to 30% of water based on the combined weight of epoxy resin and polymer containing carboxylic acid groups.
A coating composition in the form of a stable dispersion is produced by mixing the water dispersible coating composition prepared as described above with a base and sufficient water to form a predominantly aqueous continuous phase.