Polycaprolactone (PCL) is a biodegradable hydrophobic polymer with wide variety of applications in biomedical field. Certain limitations of PCL in tissue engineering and drug delivery are due to their lower degradation rates. In this work, poly-2-ethyl-2-oxazoline (PEO), a hydrophilic polymer is blended with PCL to improve the hydrophilicity so as to increase PCL degradation rate. 20 wt% solutions each of PCL and PEO using dimethyl formamide (DMF) as solvents were prepared. The two solutions were mixed in proportional volumes to form solution casted films in teflon moulds. The physio-chemical nature of the blends were characterized by X-Ray Diffraction (XRD), Fourier Transform Infrared spectroscopy (FTIR), and thermal analysis using DSC & TG/DTA. Bioactivity of the films was tested via hydroxyapatite deposition in simulated body fluid over 2, 4 and 6 weeks and characterized via XRD and SEM.