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Single dusting layers of size-selected Co nanoclusters (NCs) of sizes ranging from 1.5–5.5 nm have been deposited by a gas-phase aggregation method in ultrahigh vacuum, and embedded within a NiFe matrix. Magnetic hysteresis loops have been obtained using soft x-ray magnetic circular dichroism, which shows that these Co NCs embedded in NiFe exhibit room temperature ferromagnetism with identical coercivity to the surrounding NiFe film. The strong local exchange field at the interface between NiFe and Co NCs, combined with the magnetic anisotropy of the NiFe film, allows stabilization of NC ferromagnetism which persists to room temperature. [ABSTRACT FROM AUTHOR]