Oxide dispersion strengthened tungsten (ODS-W) alloys are promising plasma facing material in future fusion reactors. In this study, composite powders of W-Er2O3 were prepared by co-deposition method and hydrogen reduction, and then consolidated by spark plasma sintering (SPS). Microstructure evolution during co-deposition process was investigated using X-ray diffraction (XRD), scanning electron microscope (SEM), transmission electron microscope (TEM) and Fourier transform infrared spectrometer (FTIR). Also, simulation using DMol3 module in Materials Studio was carried out to understand the co-deposition mechanism. The results showed that H+ of W-OH bond in white tungstic acid was replaced by Er3+ due to coordination reaction during co-deposition process, leading to formation of ring-like chelate of (WO)nEr. This indicates that doping of Er3+ was achieved at a molecular level. Consequently, Er2O3 particles were relatively uniformly distributed in W-Er2O3 alloy, and the hardness and compressive strength reached 627 ± 19 HV and 1640 ± 40 MPa, respectively.