NaYF4:Yb3+,Er3+ nanocrystals showing high colloidal solubility in water have been obtained by treating the nanocrystals with 1-hydroxyethane-1,1-diphosphonic acid (HEDP). HEDP attaches to the surface of the nanoparticles and leads to well-separated particles in aqueous solution as verified by IR spectroscopy and dynamic light scattering measurements. In addition, the surface modification with HEDP increases strongly the up-conversion efficiency of powders and aqueous colloidal solutions of the nanocrystals. These attractive features, above all the hydrophilic nature of the nanoparticles, should make them suitable especially for bio-applications.