This could be caused by moisture getting into the wall. Check the caulking around the exterior of the windows before doing anything. Sweating from the windows, during cool humid days, can also cause peeling. This can be prevented by ventilating the room (if possible) and making sure the caulking around the window and trim to the window is in good shape.
To fix you need to remove the blisters, prime with an oil base or shellac primer, use spackling paste to smooth out the damaged areas and repaint or touch-up with original paint.