We have recently reported on the formation of composite gel vesicles prepared by the photopolymerization and crosslinking of poly(N-isopropyl-acrylamide) [poly(NIPAM)] inside phospholipid giant unilamellar vesicles (GUVs). Here we present a detailed study of the thermo-responsive behaviour of such composite vesicles. Giant vesicles filled with a poly(NIPAM) gel (gel–GUVs) exhibit a global volume phase transition, revealing a strong interaction between the gel and the phospholipid bilayer. Fluorescence studies show that the lipid membrane is not destroyed during the volume transition. The behaviour of giant vesicles filled with a poly(NIPAM) solution (sol–GUVs) depends on the volume fraction f(NIPAM) of encapsulated NIPAM, the precursor monomer for poly(NIPAM). For f(NIPAM) < 0.06, we observe a frustrated demixing of the poly(NIPAM) chains in the internal medium; for f(NIPAM) > 0.07, sol–GUVs behave like homogeneous spheres and undergo a global volume phase transition similar to the one observed in gel–GUVs. For high volume fractions (f(NIPAM) = 0.09) achieved by osmotic deflation of low volume fraction (f(NIPAM) = 0.03) sol–GUVs, we observe a full demixing of the internal medium into two well-separated phases.