You really can't blame toddlers for coloring on the walls
1. Designate specific times for coloring, when you have time to monitor them, and store the art materials out of reach the rest of the time. By putting the markers on a high shelf when you can't watch them being used, you ensure that your child understands there is a time and a place for coloring. This is also an important consideration for your child's health, as without proper supervision they could consume the paint or dyes, which can be toxic and dangerous to their health.
2. Emphasize repeatedly that artwork is meant for paper (or another approved medium) and not on other things. Tell your toddler, using simple, short and direct language. Then, let them begin their artwork. If they start to wander with the tools, direct them back to the paper. If they leave again, take away the art materials.
3. If your child is too young to recognize where and when art is allowed, provide other outlets for creativity. If the weather is nice, let your toddler draw with chalk on the sidewalk. If it is cold or rainy, set your child up with art materials in a 'safe' place and color with them. Consider placing a plastic drop cloth underneath their chair for messier projects. You can also build snow sculptures outside, and 'paint' them with water and food coloring. Bath paint and crayons, for use in the bathroom, will allow the child to draw on the walls without causing permanent damage.
4. If they continue to be attracted to the walls, designate and make a 'safe' wall for them to draw on until they can understand that this is generally frowned upon. Pick a wall, and measure its width and up to a foot over your child's head. Take enough white poster board and overlap them, covering the measured space completely. Attach it to the wall with blue painter's tape, it won't take the paint off the wall when it is removed. If the poster board gets filled up with drawings, tape butcher paper over it with more blue tape. Direct your toddler to this wall, and discipline them by removing the art materials if they deviate from it.
5. Provide significant amounts of paper and spend enough time coloring on it with your toddler that they will learn the art material's appropriate usage. Construction paper is a great idea, as it is colorful and inexpensive, and should attract your child as an interesting medium for their art. Consider getting a small, toy easel for them to do their work on, as well. This will provide them with the upright feeling of drawing on the wall without the discipline that follows, and it will help them feel like a real painter!
Remember, discipline is not the only way to teach your child right from wrong. Spending time with them and showing them how things should be done is actually much more effective, as they crave your attention. If you give them a way to spend time with you, they should be more than happy to abide by the rules.