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In this paper, a high capacity data hiding is proposed for embedding a large amount of information into halftone images. The embedded watermark can be distributed into several error-diffused images by the proposed minimal error bit searching technique (MEBS). The method can be generalized to self-decoding mode with dot diffusion or color halftone images. From the experiments, the embedded capacity from 33% up to 50% and good quality result are achieved. Furthermore, the proposed MEBS method is also extended for robust watermarking to against the degradation from printing-and-scanning and several kinds of distortions.