Phosphated polyurethane-acrylic dispersions were prepared by a new method that is free from organic solvents and requires a very low dispersion force. After the carboxylic acid groups of the phosphated polyurethane were neutralised by suitable bases, water was added to form the phosphated polyurethane seed dispersion. Polyurethane-acrylic dispersions were obtained from the phosphated polyurethane seed by emulsion copolymerisation. The polyurethane seed polymer was found to be stable over the initiator concentration used and the rheological properties of the polyurethane acrylics were found to follow Newtonian behaviour under the prescribed experimental conditions. This is a good indication that the dispersions may be used as pigment wetting media. The dynamic contact angle study showed the poor wettability of the phosphated polyurethane-acrylic dispersion films, indicating good hydrophobicity.