A method for generating stable encapsulated bubbles and dried encapsulated bubbles comprises introducing an inner stream of a gas into a liquid-filled chamber from an exit orifice of a capillary tube; introducing a middle stream of a water immiscible liquid into the exit orifice; and introducing an outer stream of an aqueous liquid to the exit orifice, to form compound bubbles. The encapsulated bubbles are formed after converting the middle phase of compound bubbles into a shell. The stable encapsulated bubbles or the stable dried encapsulated bubbles can be used in drug delivery and for enhancing ultrasound imaging.