Herein, we report a one-pot synthesis of highly stable Au nanoparticles (AuNPs) using 3,4-ethylenedioxythiophene (EDOT) as a reductant and polystyrene sulfonate (PSS-) as a dopant for PEDOT and particle stabilizer. The synthesis demonstrated in this work entails the reduction of HAuCl4 using EDOT in the presence of PSS-. The formation of AuNPs with concomitant EDOT oxidation is followed by UV-vis spectroscopy at various time intervals. Absorption at 525 nm is due to the surface plasmon band of AuNPs (violet), and broad absorption above 700 nm is due to oxidized PEDOT that was further characterized to be in its highly oxidized (doped) state, using FT-Raman spectroscopy. Transmission electron microscopy shows a polydisperse nature of the particles, and the selected area electron diffraction pattern reveals the polycrystalline nature of AuNPs. With stabilizers such as sodium dodecylsulfate (SDS) (green) and polyvinylpyrrolidone (PVP) (blue), the absorbance around 525 nm was found to be negligibly small, while PSS-showed high absorbance at 525 nm (violet) and above 700 nm (oxidized PEDOT). PSS- also allows complete oxidation of EDOT and serves as an effective dopant for PEDOT. While AuNPs covered by PEDOT alone cannot be dispersed in aqueous solutions, PSS- renders Au-PEDOT water soluble. The hydrodynamic diameter of the nanocomposite estimated from the dynamic light scattering (DLS) measurements increases in the order Na-PSS < SDS < PVP. Interestingly, the color of the Au-nano-PEDOT/PSS-aqueous dispersion changed reversibly between violet and blue and vice versa on addition of NaOH and HCl, respectively. This reversible color change appears to be a combination effect of acid/base on the properties of PEDOT, in turn changing the environment around the embedded AuNPs. The nanoparticle dispersion also exhibited very high stability in presence of 3.0 M NaCl. Remarkably, the nanocomposite Au-nano-PEDOT/PSS- was found to function as an effective catalyst to activate the reduction of 4-nitrophenol to 4-aminophenol in the presence of excess NaBH4, and the calculated apparent rate constant value of 4.39 x 10(-2) s(-1) is found to be higher than those obtained using other nanocomposites with SDS and PVP and comparable to the values reported in the case of other encapsulants.