Lipobeads (liposome-encapsulated hydrogels) combine properties of hydrogels and liposomes to create systems that are sensitive to environmental conditions and respond to changes in those conditions in a fast time scale. Lipobeads may be produced by polymerizing anchored or unanchored hydrogels within liposomes or by mixing anchored or unanchored hydrogels with liposomes. Giant lipobeads may be produced by shrinking unanchored nanogels in lipobeads and fusing the resulting lipobead aggregates, long-term aging of anchored or unanchored lipobeads, or mixing anchored or unanchored aggregated nanogels with liposomes. Poly(acrylamide), poly(N-isopropylacrylamide), and poly(N-isopropylacrylamide-co-1-vinylimidazole) lipobeads were produced and characterized.