A method for encapsulating biologically-labile materials such as proteins, liposomes, bacteria and eucaryotic cells within a synthetic polymeric capsule, and the product thereof, are disclosed. The method is based on the use of a water-soluble polymer with charged side chains that are crosslinked with multivalent ions of the opposite charge to form a gel encapsulating biological material, that is optionally further stabilized by interactions with multivalent polyions of the same charge as those used to form the gel. In the preferred embodiment, hydrolytically stable polyphosphazenes are formed of monomers having carboxylic acid side groups that are crosslinked by divalent or trivalent cations such as Ca.sup.2+ or Al.sup.3+, then stabilized with a polycation such as poly-L-lysine. A variety of different compositions can be formed from the crosslinked polymer. In a preferred embodiment, microcapsules are made by spraying an aqueous solution of polyphosphazene and material to be encapsulated into a calcium chloride solution. A semipermeable membrane is formed on the microspheres by complexation of the surface carboxylate groups with poly(L-lysine).