Abstract: In this study, a new approach for watermarking of the Error-Diffused images is proposed for hiding data in halftone images. This novel data hiding is by forcing the parity on the processing pixel and preceding halftoned pixels in a unit of data either even or odd. Here, the parity used to preserve the data by means of authentication and tampering detection. The error between the original halftoned bit and parity setting bit of the current pixel is propagated to the unprocessed neighboring pixels for maintaining good visual quality. The proposed approach is directly applied to the halftoning process without extra computations. Experimental results show that the proposed method has successfully hidden the watermark into the Error-Diffused images and the results are encouraging.