Direct observation of the miscibility improving effect of ultra-small polymeric nanoparticles (radius approximate to 4nm) in model systems of soft nanocomposites is reported. We have found thermodynamically arrested phase separation in classical poly(styrene) (PS)/poly(vinyl methyl ether) blends when PS linear chains were totally replaced by ultra-small, single chain PS nanoparticles, as determined by thermo-optical microscopy measurements. Partial arrested phase splitting on heating was observed when only some of the PS chains were replaced by unimolecular PS nanoparticles, leading to a significant increase of the lower critical solution temperature (LCST) of the system (up to 40 degrees C at 15 vol.-% nanoparticle content). Atomic force microscopy and rheological experiments supported these findings. Thermodynamic arrest of the phase separation process induced by replacement of linear polymer chains by unimolecular polymer nanoparticles could have significant implications for industrial applications requiring soft nanocomposite materials with excellent nanoparticle dispersion in a broad temperature range.