Confinement of polymer chains in polymer nanocomposites influences their dynamics leading to the changes in their molecular packing compared to pure polymer. In order to study the exclusive effects of confinement on molecular packing of poly vinyl alcohol (PVA) chains, PVA nanocomposite films with varying (wt%) gold nanoparticles (Au NPs) were prepared using simple solution casting method. The triplet state of positronium (ortho-positronium, o-Ps) was used as a probe for determination of sub nano level free volume holes' size, density, and size distribution. The study shows that molecular packing (free volume characteristics) is exclusively modified due to the confinement of PVA chains though there is no direct interfacial interaction between PVA and Au NPs. The changes are suppressed at highest studied Au NPs loading (0.60 wt%) mainly due to nanoparticle aggregation leading to an increase in the inter particle distance, a parameter which quantitatively defines the effect of confinement in polymer nanocomposites. X-ray diffraction (XRD) and Fourier transformed infra-red (FTIR) measurements were carried out to index the crystallinity and hydrogen bonding of PVA matrix. The variation in thermo-mechanical properties (Young's modulus and glass transition temperature) of the nanocomposite is explained considering the changes in molecular packing and crystallinity of PVA matrix. POLYM. COMPOS., 00:000-000,