In recent time, cloud is the basic platform for all emerging technology. In cloud computing, virtual machines are configuring for cloud users and virtual machine combines all the function of an operating system and its application software. Multiple operating systems can run on a single machine using virtualization concept. In server virtualization, various operating systems run on single machine. These virtual machines (VMs) can be moved from one server to some other as per the requirement. Downloading a virtual machine image to create a new virtual machine on the guest operating system has several security implications. Unauthorized access might lead to security issues like malware injection. As a result, an algorithm that can provide encryption, virus detection, and automatic patching in order to restore the image is needed. In this paper, an OTP-based algorithm in cloud environment has been designed to resolve the above mention issues and minimized the security implications.