A system and method of retrieving a watermark in a watermarked signal are disclosed. The watermarked signal comprises odd and even overlapped blocks where the watermark is contained in the even blocks. The method comprises, for each k-th even block, subtracting the two adjacent odd numbered blocks from the k-th even block of the watermarked signal to retrieve s*.sub.k(n), transforming s*.sub.k(n) into the frequency domain to generate S.sub.k(f), calculating a phase of S.sub.k(f) as .phi.(f) and a phase of S.sub.k(f) as .phi.(f), calculating the difference .PSI.(f) between .phi.(f) and .phi.(f), unwrapping .PSI.(f) to obtain the phase modulation {tilde over (.phi.)}.sub.k(f), and using a Viterbi search to retrieve the watermark embedded in {tilde over (.PHI.)}.sub.k(f).