One of our bath walls is green Sheetrock with a white semi gloss paint finish. As you can see on the pictures attached, the paint has started to bubble and strip.

What can we do now?
shall/can we tile?
can we keep a painted wall (our aesthetic preference) but using another primer and an exterior type paint? in that case what shall we use?
are there any cement layers that could be added to the wall and that would allow us to have a white finish?
Wall behind tile and paint.

Found construction picture (shows what is behind the sheetrock).
We really cannot tell from photos if they used vapor barrier or not...
