Rhodium nanoparticles (Rh NPs) stabilized by phosphine functionalized ionic liquids (FILs) were prepared in [BDMI]NTf2 (BDMI=1-butyl-2,3-dimethylimidazolium, NTf2=bis(trifluoromethanesulfonyl) imide) using H-2(g) (4 bar) as a reducer. Rh(allyl)(3) was used as a "salt-free" Rh NP precursor and allowed to enhance the stability of the Rh NPs compared to the usual RhCl3 precursor. The synthesized FIL stabilized Rh NPs proved to be active biphasic catalysts for the hydrogenation of toluene, styrene and xylenes under mild conditions (75 degrees C, 40 bar H-2(g), 3 h). The impact on activity of the length of the spacer between the phosphine function and the ionic liquid moiety in the FIL was studied. The Rh NPs stabilized by FILs showed higher catalytic activity and recyclability than NPs synthesized in the absence of a stabilizer and more stable than the system employing triphenylphosphine (PPh3) as a stabilizer. The size of the stabilized Rh NPs was measured to be around 2 nm by TEM, while those produced in the absence of a FIL stabilizer formed only aggregates. c 2011 Elsevier B. V. All rights reserved.