Digital watermarks have been proposed as a method for discouraging illicit copying and distribution of copyright material. One approach to Transform Domain image watermarking is to divide the image into separate blocks and compute the transform of each block. The watermark is inserted in the transform domain and the inverse transform is then computed. Such an approach is particularly effective against JPEG compression where 8 X 8 blocks are used in conjunction with the DCT. Using small blocks allows the watermark to be embedded adaptively as a function of the luminance and texture. However for small block sizes blocking artifacts are observed when the strength of the watermark is increased. In order to circumvent this problem, we propose a new approach based on Lapped Orthogonal Transforms (LOT) in which the watermark is inserted adaptively into the LOT domain. Robustness of the watermark to operations such as lossy compression is achieved by using a spread spectrum signal which is added in the LOT domain. The keys used to embed the spread spectrum signal are generated, certified, authenticated and securely distributed using a public key infrastructure containing an electronic copyright office and a certification authority. In addition to the above we propose using an invisible template to reverse the effects of rotation, rescaling and cropping on a watermarked image. This separate invisible template is based on the properties of the Fourier Transform. Finally, we objectively evaluate the performance of the proposed algorithm in order to demonstrate the robustness of the proposed technique with respect to a number of common image processing including JPEG compression, rotation, scaling and cropping.