With generative models producing high quality images that are indistinguishable from real ones, there is growing concern regarding the malicious usage of AI-generated images. Imperceptible image watermarking is one viable solution towards such concerns. Prior watermarking methods map the image to a latent space for adding the watermark. Moreover, Latent Diffusion Models (LDM) generate the image in the latent space of a pre-trained autoencoder. We argue that this latent space can be used to integrate watermarking into the generation process. To this end, we preset LaWa, an in-generation image watermarking method designed for LDMs. By using coarse-to-fine multi-scale watermark embedding modules, LaWa modifies the latent space of pre-trained autoencoders and achieves high robustness against a wide range of image transformations while preserving perceptual quality of the image. We show that LaWa can also be used as a general image watermarking method. Through extensive experiments, we demonstrate that LaWa outperforms previous works in perceptual quality, robustness against attacks, and computational complexity, while having very low false positive rate. Code is available as supplementary materials.