Water production from a subterranean formation is inhibited or controlled by pumping a fluid containing coated particles through a wellbore into the formation. The particles have been previously coated with a relative permeability modifier (RPM). Upon contact with water, the RPM coating expands or swells and inhibits and controls the production of water. The RPM may be a water hydrolyzable polymer having a weight average molecular weight greater than 100,000. The particles may be conventional proppants or gravel.