Gold nanoparticles (AuNPs) of about 5 nm in diameter were biosynthesized at room temperature (300 K). The PVA/2.5 wt% KH2PO4 or KDP composite film and PVA/2.5 wt% KDP/AuNPs nanocomposite films with different concentrations of AuNPs were prepared. Interestingly, addition of 0.05 wt% of AuNPs to the PVA/2.5 KDP percolative composite film destroys percolative behavior of this composite film. Furthermore, the PVA/2.5 wt% KDP/0.05 wt% AuNPs nanocomposite film exhibited high room temperature dielectric permittivity (epsilon' similar to 590 at 1 kHz). The behavior of AC conductivity (sigma(ac)) of the nanocomposite films indicated correlated barrier hopping type of conduction mechanism. The Cole-Davidson dielectric response becomes evident as the interfacial polarization process acquires a more symmetric form, tending to Debye relaxation. High value of epsilon' promises direct application in capacitors. Moreover, the novel feature of destroying the percolative behavior by AuNPs may be applied even in other systems. (C) 2013 Elsevier Ltd. All rights reserved.