A composition of matter comprising anionic clay having the general formula [M2+1-xM3+x(OH)2]x+(x/n)An−·yH2O  (I) or [M1+M3+2(OH)6]1+(1/n)An−·yH2O;  (II) where M1+ is a mono-valent metal; M2+ is a divalent metal; and M3+ is a trivalent metal; A is an inorganic or organic anion, chosen such that the rule of charge neutrality is obeyed; n is an integer; x is any rational number between 0 and 1; and y is any rational number between 0 and 10; where the anionic clay is in the form of particles having a volume weighted mean particle size diameter of less than 500 nm. Stable colloidal dispersions comprise such anionic clay particles having a volume weighted mean particle size diameter of less than 500 nm dispersed in a liquid medium. Method for preparing such stable colloidal dispersion of anionic clay particles comprises simultaneously bringing together salt solutions of M2+ and M3+ metals, or of M1+ and M3+ metals, and a base in a high shear mixing zone within a liquid dispersion medium in a particle precipitation vessel, and precipitating anionic clay particles having a volume weighted mean particle size diameter of less than 500 nm.