Radio Frequency Identification systems have been widely used in many applications nowadays. Since then, data security has been an important issue in RFID communication in order to prevent undesired people to decrypt communication data. Considering the problem, a secure RFID system is designed in this study. An RFID communication at 868MHz is demonstrated by programming transceiver modules via Spartan3E FPGA Kits. To increase communication security between reader and tag, 2-stage authentication protocol is preferred. Tiny Encryption Algorith (TEA) module is used as IP Core in FPGA to provide data encryption and sistem design has been completed.