A composition of matter comprising anionic clay having the general formula [M.sup.2+.sub.1-xM.sup.3+.sub.x(OH).sub.2].sup.x+(x/n)A.sup.n-yH.sub.2O (I) or [M.sup.1+M.sup.3+.sub.2(OH).sub.6].sup.1+(1/n)A.sup.n-yH.sub.2O; (II) where M.sup.1+ is a mono-valent metal; M.sup.2+ is a divalent metal; and M.sup.3+ is a trivalent metal; A is an inorganic or organic anion, chosen such that the rule of charge neutrality is obeyed; n is an integer; x is any rational number between 0 and 1; and y is any rational number between 0 and 10; where the anionic clay is in the form of particles having a volume weighted mean particle size diameter of less than 500 nm. Stable colloidal dispersions comprise such anionic clay particles having a volume weighted mean particle size diameter of less than 500 nm dispersed in a liquid medium. Method for preparing such stable colloidal dispersion of anionic clay particles comprises simultaneously bringing together salt solutions of M.sup.2+ and M.sup.3+ metals, or of M.sup.1+ and M.sup.3+ metals, and a base in a high shear mixing zone within a liquid dispersion medium in a particle precipitation vessel, and precipitating anionic clay particles having a volume weighted mean particle size diameter of less than 500 nm.

 
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