Poly(methyl methacrylate) coated $BaF_2:Er^{3+}$ nanoparticles were prepared via a novel reverse-emulsion polymerization process using methyl methacrylate as continuous phase and water as dispersed phase. Preparation and coating of $BaF_2:Er^{3+}$ particles were processed in a single step. The resulting polymeric composites show the characteristic $Er^{3+}$ luminescence at excitation of 980 nm and may have potential applications in amplified optical networks.