This invention relates to an improved method of preparing an implantable gel or paste for placement between injured bones or placement in bony voids to induce regeneration, and the compositions produced thereby. Specifically, mineral, ceramic, or processed bone particles are coated with a high molecular weight polymer capable of forming a viscous gel when reconstituted with water, saline, autologous blood, sera, or other medically acceptable solution. This high molecular weight polymer coating material may be a natural or synthetic polymeric material, producing a wettable gel upon exposure to water, saline, or another solution. In storage, the composition will be granular and dry but easily wetted. In use, the material is reconstituted to a viscous malleable paste by the simple addition of water or other medically acceptable solution without the need for aggressive mixing. The paste may be delivered by syringe or manually deposited yet will be resistant to lavage or to displacement by gravity induced flow.