Whatever its causes (inadequate surface preparation or moisture in the wall), paint that begins to peel and blister results in an unattractive surface that is subject to rot and decay. It is easy (if labor intensive) to remove peeling paint from walls and other surfaces with the proper tools and techniques.
Lay a drop cloth over the floor under the peeling paint to catch chipped paint and any other debris that falls and make cleanup easier. Use a drop cloth outdoors as well to prevent paint from littering the ground, which can harm the environment.
Wear protective gear such as a dust mask and safety goggles to reduce inhaling particles or injuring your eyes. Wear gloves to protect hands, especially if using solvents to remove paint or clean the area afterward.
Use a paint scraper to remove most of the peeling paint. Be careful not to apply too much pressure while scraping, or you could damage the wall or other surfaces under the paint. Move the scraper across the affected area in one direction until the majority of the paint is removed. Some small remnants of paint may remain, but they can be removed through sanding.
Start sanding with an 80 grit fine-medium sandpaper to remove any remaining peeling paint, and then move to a 100 grit fine sandpaper. Sand the entire area until the wall is clean and fairly even. Use a 120 grit fine sandpaper to sand the wall one final time, which will prepare the surface for repainting and eliminate any small imperfections.
Wash the sanded area of the wall using a solution made of one part trisodium, one part phosphate and two parts water. Both trisodium and phosphate are available at well-stocked home improvement stores. Dip a clean cloth into the solution and wipe the surface clean. The trisodium cleaner will not leave any film or residue on the wall and will prepare it for repainting or applying wallpaper. Allow the wall to air-dry prior to repainting or priming.