Today's Field Programmable Gate Arrays (FPGA's) are in use to implement high performance image processing systems. In this paper it is used in implementation of a FPGA based digital camera system for image capturing and real time image processing. Image captured by a Complementary Metal Oxide Semiconductor (CMOS) camera's image sensor are initially stored in the FPGA device memory and then they are displayed on the Liquid Crystal Display (LCD) digital touch panel. The main goal of this proposed design implementation architecture is to implement and test advanced complex image processing algorithm. The device also supports the control of the Complementary Metal Oxide Semiconductor (CMOS) image sensor through the control of the Liquid Crystal Display LCD digital touch panel. Further the FPGA device has the ability to communicate with a Personal Computer (PC) through an interfaced Joint Test Automatic Generation (JTAG) for storing the images on to it and further processing. The structural element of this proposed architecture was chosen to be implemented on ALTERA's DE2 FPGA device.