To embark upon the challenges in the field of nuclear industry including proliferation and waste management, the utilization of U-free fuel matrix (Inert Matrix Fuel) are proposed to be utilized to burn and transmute various minor actinides including Pu, Am etc. Thus in this direction, yttria stabilized zirconia (YSZ) microsphere matrix co-doped with different mol% of Ce and Nd were synthesized using internal gelation method. Different metal concentrations [M] and hexamthylnetetramine+urea (HMTA-urea) concentrations ([HMTA-urea]/[M]= [R]) were used in order to prepare crack free YSZ microspheres. The conventional sol gel method used led to the formation of anisotropic tetragonal phase due to the leaching of constituent elements. Thus a modified scheme was developed as elaborated in detail in the manuscript which resulted into an isotropic cubic phase for all compositions. The thermo-physical properties like thermal expansion, heat capacity and thermal conductivity of the samples were evaluated in the temperature range 298–1473 K and are at par with the values reported for other matrices. The thermal conductivity data showed that the conduction in these materials mainly occurs through phonon conduction and the presence of enhanced oxygen vacancies in them due to Ce and Nd doping, diminishes the thermal conductivity significantly. Further, the local structure was probed using EXAFS which confirmed them to be homogenous and coordination number 8 for all the samples. Thus with the development of such kind of fuels, the risk of proliferation can be avoided with additional advantage of energy generation.