Nowadays, digital watermarking has many applications such as broadcast monitoring, owner identification, proof of ownership, transaction tracking. Embedding a hidden stream of bits in a file is called Digital Watermarking. This paper introduces a LSB information hiding algorithm which can lift the wavelet transform image. LSB based Steganography embeds the hiding text message in least significant bit of the pixels. The proposed method has good invisibility, robustness for a lot of hidden attacks. As we think about the capacity lead us to think about improved approach which can be achieved through hardware implementation system by using Field Programmable Gate Array (FPGA). In this paper hardware implementation of digital watermarking system is proposed. MATLAB is used to convert images into pixel-format files and to observe simulation results. To implement this paper XPS & VB are needed. In XPS, first select hardware & software components then by adding source and header files & converting into bit streams and download into FPGA, to obtain Stego image.