Lay a tarp on the floor to catch faint flakes.
Scrape off the peeling portions of the paint with a plastic paint scraper, working in the opposite direction as the flakes. Use gentle pressure to leave the fewest possible number of scrapes and gouges in the drywall.
Sand any remaining paint with 100-grit sandpaper. Stop sanding when the grayish-white drywall shows through.
Apply a thin layer of drywall patching paste over any scrapes and gouges that removing the paint has caused. Use a putty knife to scrape the paste over the wall, filling in any damage, then allow it to dry.
Resand the area with 220-grit sandpaper to smooth the surface.
Wipe the wall with a tack cloth to remove sanding dust.
Prime the repaired area and paint it to match the undamaged portions of the wall.