Freely water-soluble 12-tungstophosphoric acid could be made insoluble through immobilization inside a silica matrix by means of set-gel technique involving hydrolysis of tetraethyl orthosilicate. The silica-included heteropolyacid thus obtained catalyzed the water-participating reactions of esterification and isobutene hydration more efficiently than the resin catalyst of Amberlyst-15 and the zeolite H-ZSM-5. The silica-induded heteropolyacid is a microporous material with a sharp pore-size distribution around 0.55 nm, and it showed shape selective acid catalysis in the alkylation of phenol with formaldehyde giving a higher yield of 4,4＇-dihydroxydiphenylmethane isomer.