This invention provides a water-soluble macromonomer having terminal unsaturation obtained by polymerization of monomers in the presence of inclusion complex of chain transfer agent in aqueous system. Hydrophobic chain transfer agent AMSD forms an inclusion complex with methylated cyclodextrin. The complexation enhances its solubility in water and enables the polymerization of water-soluble monomers in aqueous medium. After polymerization cyclodextrin is removed and the macromer with terminal unsaturation obtained can be used further for copolymerization with any vinyl monomer.