Calcium alginate (Ca2+/alginate) gel beads find use in diverse applications, ranging from drug delivery and tissue engineering to bioprocessing, food formulation, and agriculture. Unless modified, however, these gels have limited stability in alkaline media (including phosphate buffers), and their high solute permeability limits their ability to efficiently encapsulate and slowly release water-soluble small molecules. Here, we show how these limitations can be addressed by mixing the alginate solutions used in the bead preparation with the nontoxic anionic polymer polyphosphate (PP). Upon complexing Ca2+ ions, PP undergoes complex coacervation (i.e., liquid/liquid phase separation into a Ca2+/PP-rich coacervate phase and a dilute supernatant phase). At lower PP concentrations, the Ca2+/PP coacervate appears to simply remain dispersed within the beads. Though its presence makes the beads more stable in alkaline media (phosphate-buffered saline and seawater), it has little impact on the bead stiffness, morphology, and (at least in the absence of substantial payload/coacervate association) encapsulation and release properties. When the PP concentrations exceed a critical value, however, Ca2+/PP coacervation within the gelling Ca2+/alginate beads collapses the resulting beads into more compact, interpenetrating polymer networks. Besides their enhanced stability to alkaline environments, these hybrid beads exhibit irregular morphologies with wrinkled and dimpled surface structures and macroscopic (closed) internal pores, and their collapse into these polymer-rich networks also makes them significantly stiffer than their PP-free counterparts. Crucially, these beads also exhibit a much lower solute permeability, which enables highly efficient encapsulation and multiday release of water-soluble small molecules (with the beads encapsulating >90% of the added model payload and sustaining its release over 3-5 d). Collectively, these findings provide a mild and simple (single-step) pathway to generating ionically cross-linked alginate beads with significantly enhanced stability, encapsulation efficiency, and sustained release.