Quantum dots (QDs) are fluorescent nanoparticles with unique photophysical properties that enable them to potentially replace traditional organic dyes and fluorescent proteins in various bio-imaging applications. However, the inherent toxicity of their cores based on cadmium salts, limits their widespread biomedical use. We have developed a novel nanocomposite polymer emulsion based on Polyhedral Oligomeric Silsesquioxane Poly (carbonate-urea) Urethane (POSS-PCU) that can be used to coat quantum dots to nullify their toxicity and enhance photostability. Here we report the synthesis and characterization of a novel POSS-PCU nanocomposite polymer emulsion and describe its application for coating QDs for biological application. The polymer was synthesized by a process of emulsion polymerization and formed stable micelles of ~ 33nm in diameter. CdTe/CdS/ZnS QDs were efficiently stabilised by the polymer emulsion through encapsulation within the polymer micelles. Characterisation studies showed no significant change in the unique photophysical properties of QDs after coating. The polymer was biocompatible to HepG2, HUVECs and Mouse skeletal muscle cells at 2.5% after a 24 hr exposure on in vitro testing. Polymer encapsulated QDs showed enhanced photostability on exposure to high degrees of UV irradiation and air as well as significantly reduced cytotoxicity on exposure to Hep G2 cells at 30µg/ml for 24h. We have therefore concluded that the POSS-PCU polymer emulsion has a potential to make a biocompatible and photostable coating for QDs enabling a host of biomedical applications to take this technology to the next level.