In this paper, we develop a robust bit-plane watermarking technique based on zerotree coding. A robust watermark is an imperceptible but indelible code that can be used for ownership identification. Zerotree-based encoders are popular owing to their high coding efficiency, low coding complexity, and the capability of generating scalable bitstreams. Efficient image compression and watermarking algorithms use similar techniques to reduce the introduced visual artifacts. In contrast to the conventional approaches where compression and watermarking are treated independently, the proposed method integrates these two operations. The watermark is inserted by directly modifying the output bitstream of the zerotree-based quantizer. Since the watermarking framework is tightly coupled with compression, we can avoid adding watermark information to the coefficients that would be susceptible to quantization errors. Furthermore, this compressed-domain watermarking framework may reduce the system's complexity since watermark embedding and retrieval may be performed directly in the compressed domain. Security of the system relies on the secure keys that determine the watermark signal and watermarking locations. Complete evaluation is conducted against both noise-type and geometric attacks. Experimental results show that our method survives the aforementioned attacks and the performance is competitive with or better than transform-domain approaches.