Red blood cells or erythrocytes have a special protein called as hemoglobin, which helps in the transport of oxygen from lungs to all living tissues and removes carbon dioxide by exhalation. Erythrocyte count gives information regarding the patient health status on hematological diseases and can be differentiated into mainly anemia and polycythemia . Conventional method of erythrocyte counting by hemocytometer may lead to human errors. Machines developed for erythrocyte counting causes high cost and time consumption. This work emphasize on FPGA implementation of image processing algorithm for segmented erythrocyte counting. Ycbcr Color conversion algorithm is used for erythrocyte segmentation from the blood smear image and connected circular hough transform is used for counting. The proposed algorithm is implemented on the FPGA board and the accuracy of the technique is evaluated.