This paper proposes a new spatial domain watermarking of grayscale images and has also shown its VLSI Implementation without altering its content in real time using a secret key. The secret key is generated by searching the watermark pixel values in host image content and the location maps are marked in secret key. Therefore this algorithm is called PVSA- Pixel Value Search Algorithm. The proposed algorithm does not make any change in the host image. Thus it shows high robustness to signal processing attacks. The watermark extraction process is simple as the host content is extracted based on key. We have evaluated the robustness of the algorithm against several signal processing attacks using MATLAB. Finally we have implemented the same algorithm in verilog HDL using Altera Quartus-II. © 2015 IEEE.