A method for forming surface decorated particles including stabilizing dispersed hydrophobic phase particles in an aqueous phase with fine inorganic particles having a relatively hydrophilic surface; and treating the stabilized dispersed hydrophobic phase particles with a hydrophobic group containing reactant to form hydrophobic groups covalently bonded to surfaces of the fine inorganic particles. In a particular embodiment, the invention provides a limited coalescence process for preparing binder polymer particles using inorganic stabilizer particles that provide a plurality of surface bonding sites and reacting such sites with a plurality of alkoxy silane moieties that contains pendant hydrophobic groups.