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Virtual reality (VR) systems have been increasingly used in recent years in various domains, such as education and training. Presence, which can be described as ‘the sense of being there’ is one of the most important user experience aspects in VR. There are several components, which may affect the level of presence, such as interaction, visual fidelity, and auditory cues. In recent years, a significant effort has been put into increasing the sense of presence in VR. This study focuses on improving user experience in VR by increasing presence through increased interaction fidelity and enhanced illusions. Interaction in real life includes mutual and bidirectional encounters between two or more individuals through shared tangible objects. However, the majority of VR interaction to date has been unidirectional. This research aims to bridge this gap by enabling bidirectional mutual tangible embodied interactions between human users and virtual characters in world-fixed VR through real-virtual shared objects that extend from virtual world into the real world. I hypothesize that the proposed novel interaction will shrink the boundary between the real and virtual worlds (through virtual characters that affect the physical world), increase the seamlessness of the VR system (enhance the illusion) and the fidelity of interaction, and increase the level of presence and social presence, enjoyment and engagement. This paper includes the motivation, design and development details of the proposed novel world-fixed VR system along with future directions.