A better scheme is proposed for image authentication and restoration based on standard deviation (STD) using two watermarks, one for detecting tampered regions and the other for retrieval. The main contribution of this work is a decrease of recovery watermark, which is compressed from three categories according to the STD values of every quantization discrete cosine transformation coefficients block. In addition, blocks corresponding to different categories are encoded to variable lengths and then encrypted based on the index of a chaotic sequence in an ascending order. At the same time, the authentication watermark uses a pixel-wise scheme obtained by random permutations and suitable exclusive OR operations among bitplanes of the host image. Experimental results show that the proposed scheme is not only secure but also detect any modification made to images and restore regions that have been modified.