Approximate computing-based arithmetic units are oriented towards reduction in power, delay, and area. Intrinsic error tolerance capability of emerging application domains, like multimedia, Internet of Things (IoT), and image processing provides better opportunities for optimization of approximate arithmetic units. In this paper, a novel 1-bit imprecise full adder (IFA) is proposed with less gate count. Also, two versions of 16-bit error tolerant adders (ETAs), namely a low power and area efficient error tolerant adder (LETA) and improved low power and area efficient error tolerant adder (ILETA), are proposed. In these proposed ETAs, the most significant bit (MSB) segments are realized in same approach, whereas the least significant bit (LSB) segment of LETA and ILETA are realized using an existing modified full adder (MFA) and proposed IFAs, respectively. The proposed and existing ETA adders are implemented using a Verilog hardware description language (HDL) and synthesized in a Synopsys electronic design automation (EDA) Tool using Taiwan Semiconductor Manufacturing Company (TSMC) 65nm technology. The proposed (ILETA, LETA) adders exhibit (55%, 50%) reduction in power consumption and achieve significant reduction in area (68%, 61%). Further, in this work, a new performance metric namely power and error product (PEP) is proposed in order to evaluate the approximate adders in terms of power and error metrics. It is found that the proposed ILETA achieves a low PEP of 1.05 (Formula presented.) (Formula presented.) compared with other ETAs. To study the efficacy of the proposed ETA adders in image processing application, an image blending algorithm is implemented and simulated using MATLAB. From simulation results, it is observed that the proposed ETA adders exhibit a high peak signal-to-noise ratio (PSNR). © 2020 John Wiley & Sons, Ltd.