Radio Frequency Identification (RFID) technology is being deployed increasingly in diverse applications and has become pervasive and ubiquitous. While the characteristics of RFID make recognition possible without physical contact, it also has many problems pertaining to privacy and security. This has led to slow adaptation of RFID technology for large number of applications. Moreover, any approach without addressing the crucial factors like, scalability, flexibility, cost, performance, computational resources and ease of use is not acceptable for deploying the RFID technology. This project provides an introduction to RFID technology and the privacy and security threats it faces. It reviews recently proposed RFID authentication techniques, and presents an FPGA-based RFID tag with a secure authentication protocol between the tag and reader, addressing all RFID security issues and threats including forward secrecy, eavesdropping, tracking, cloning, replay attack and denial of service attack. The project explores RFID authentication protocol using the Altera's Nios II embedded processor that provides a flexible exploration environment.