Transient [(RhH)-H-II(CO)(PPh3)(2)](-) 2 compiex obtained by the reaction of synthesis gas with montmorillonite loaded complex [Rh(PPh3)(3)](+) 1 catalyzes the hydroformylation of allyl alcohol at 70 degrees C and 60 atm CO+H-2 (1:1) in alcoholic solvents to give > 96% yield of the linear product (L) 4-hydroxybulyraldehyde with branched (B)/linear product mole ratio 0.04. The activity of 2 is greatly influenced by the alcoholic solvents used in the hydroformylation reaction; the longer the carbon chain higher the activity of the catalyst with the loss of selectivity (B/L ratio 0.55-0.14). The activity is compared with the Wilkinson catalyst [(RhH)-H-I(CO)(PPh3)(2)] 6 in homogeneous conditions, Complex 6 is found to be five times more reactive than 2 but with a loss of selectivity in the hydroformylation of allyl alcohol which gives 4-hydroxybulyraldehyde (65%) (B/L, ratio 0.54) in ethanol, Similar observations have been found in the hydroformylation reactions of styrene, 4-chlorostyrene, cyclohexene and 1,3-butadiene to give corresponding products.