The fabrication and characterization of template silver nanoshell structures and the encapsulation of gold nanoparticles using biocompatible poly(oxyethylene)-poly(butylene) diblock co-polymer vesicles is described in this work. These vesicles have a narrow diameter size distribution around 200 nm. Silver nanoparticles (ϕ = 1–10 nm) functionalized with decanethiol were successfully entrapped in the hydrophobic membrane and non-functionalized gold nanoparticles (ϕ = 3.0–5.5 nm) were encapsulated in the vesicle core. Transmission Electron Microscopy confirms the localisation of the particles; silver functionalized nanoparticles appear to thicken the vesicle membrane as shown with TEM image analysis. The enhancement of the optical properties is confirmed using transmission spectrophotometry; the 430 nm plasmon resonance peak of the silver nanoparticles was replaced by a broader extinction spectrum to beyond 700 nm (O.D. = 0.8). For a number density of 4.8 × 1012 mL−1 the scattering cross section was calculated to be 0.92 × 10−4μm2 with a scattering coefficient of 0.44 mm−1. The measurements indicate scattering cross section of 3.8 × 10−5μm2, attenuation coefficient of 0.18 mm−1 and extinction efficiency equal to 1.2 × 10−3. Stable and biocompatible block co-polymer vesicles can potentially be used as plasmon-resonant optical contrast agents for biomedical applications.