In this paper, the design and implementation of echo canceller with new variable step size algorithm is discussed. The method used in the new algorithm is to periodically adopt the test function which helps an optimal coefficient tracking. This algorithm outperforms LMS and VS algorithms in convergence speed and steady state error. As the period of test function is decreased, the speed of convergence is improved, but the number of calculation is increased, then the trade off between these parameters must be considered. Simulation results show new algorithm outperforms LMS and VS algorithms in convergence rate. For the design of hardware, circuit is designed with VHDL, and synthesized with Act1 withc is a FPGA library of ActelTM in use of synovation of InterGraph$^{TM}$. Verification of the synthesized circuit is carried out with simulator DLAB. The circuit based on the algorithm which is suggested in this paper calculated 7 radix places of inary number. A simulation data for the verification is based on the data of algorithm simulation. When the same input data is applied to the both simulation, output results of circuit simulation had slight difference in compare with that of algorithm simulation. The number of used gate is about 5,500 and We have 5.53MHz in maximum frequency.y.