Digital watermarking is a labeling technique for digital images which embeds a code into the digital data so the data are marked. Watermarking techniques previously developed deal with on-line digital data. These techniques have been developed to withstand digital attacks such as image processing, image compression and geometric transformations. However, one must also consider the readily available attack of printing and scanning. The available watermarking techniques are not reliable under printing and scanning. In fact, one must consider the availability of watermarks for printed images as well as for digital images. An important issue is to intercept and prevent forgery in printed material such as currency notes, bank checks, etc., and to track and validate sensitive and secret printed material. Watermarking in such printed material can be used not only for verification of ownership but as an indicator of date and type of transaction or date and source of the printed data. In this work we propose a method of embedding watermarks in printed images by inherently taking advantage of the printing process. The method is visually unobtrusive to the printed image, the watermark is easily extracted and is robust under reconstruction errors. The decoding algorithm is automatic given the watermarked image.