When a water droplet is deposited within a sparsely miscible liquid medium, such as certain oils, the droplet surprisingly vanishes, even in a confined geometry. Such a phenomenon has crucial consequences for multiphase flows in which confined nano- and/or picolitre droplets are considered. We report here experiments of microdroplet dissolution in microchannels that reveal an enhancement of the shrinkage of confined water microdroplets in oil due to the permeability of the walls - made of polydimethilsiloxane (PDMS) - and a delay when collective effects are present. The system is first modelled assuming that the dissolution of the droplet in its surrounding liquid follows the Epstein-Plesset solution of the diffusion equation. The dissolution of small isolated droplets can indeed be described by this solution of the diffusion equation, while the vanishing of droplets larger than a certain critical value and those closer to other droplets requires numerical simulations. Experimental measurements and simulations compare well only when the boundary conditions of the confined system, the neighbouring droplets and, interestingly, the evaporative water vapour flux through the PDMS are all taken into account in the numerical model. Our results thus reveal the important role of the water solubility in oil and, most remarkably, of the water vapour transport through permeable walls.