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Microcontrollers and their ever growing applications have changed our everyday experience by its feature of programmability, data processing speed and with the consequent intelligences. Through this adventure of invention and engineering, the optoelectronic devices especially the light emitting diodes (LEDs) are used in various fields, such as electronic appliances, optical communication, security, navigation, agro-electronics, etc. To implement these scopes, the LEDs are required to be controlled with a higher degree of precision and flexibility, which is the concern of this work. Towards that various control of a bi-color LED is implemented with a built in alarm system and a liquid crystal display (LCD) for information display; which are automatically controlled by the microcontroller Atmega8. A Light Dependent Resistor (LDR) and a variable resistor (VAR/POT) is used to provide individual input data for comparison, and produces a pre-programmed output to operate the bi-color LED such as LED ON/OFF, LED blinking, LED color changing and alarming. The developed system of a single bi-color LED (0.1-watt) required 0.98μA and 23.5mA current, and 4.88mW and 117.5mW power, during standby and automated blinking sequences (Yellow-Off-Red) respectively; and the buzzer consumed only 0.49mW power for alarming keeping the supply voltage level of 5V. These very low power consumptions and level of power supply voltage lead it to be very compatible with solar power system, and also applicable in local and remote security application. Proteus ISIS 7.7 is used for system design and simulation by which it is proved to be applicable for security purpose. Code Vision AVR is used to write the program code and for burning the microcontroller ATmega8.