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Transparency and robustness are two conflicting requirements demanded by digital image watermarking for copyright protection and many other purposes. A feasible way to simultaneously satisfy the two conflicting requirements is to embed high-strength watermark signals in the host signals that can accommodate the distortion due to watermark insertion as part of perceptual redundancy. The search of distortion-tolerable host signals for watermark insertion and the determination of watermark strength are, hence, crucial to the realization of a transparent yet robust watermark. This paper presents a color image watermarking scheme that hides watermark signals in most distortion-tolerable signals within three color channels of the host image without resulting in perceivable distortion. The distortion-tolerable host signals or the signals that possess high perceptual redundancy are sought in the wavelet domain for watermark insertion. A visual model based upon the CIEDE2000 color difference equation is used to measure the perceptual redundancy inherent in each wavelet coefficient of the host image. By means of quantization index modulation, binary watermark signals are embedded in qualified wavelet coefficients. To reinforce the robustness, the watermark signals are repeated and permuted before embedding, and restored by the majority-vote decision making process in watermark extraction. Original images are not required in watermark extraction. Only a small amount of information including locations of qualified coefficients and the data associated with coefficient quantization is needed for watermark extraction. Experimental results show that the embedded watermark is transparent and quite robust in face of various attacks such as cropping, low-pass filtering, scaling, media filtering, white-noise addition as well as the JPEG and JPEG2000 coding at high compression ratios.