Handwritting deformation and complex structure has been one of the most challenging problems in handwritten recognition. In this paper a online handwritten recognition tool has been for recognition. Online handwriting data is collected as strokes, where a stroke is defined as the sequence of data points captured from the event of a pen-down to the subsequent pen-lift. Lipi toolkit engine is used to develop the character recognition system. Lipi toolkit is open source engine. Engine uses backpropagation and nearest neighbour for pattern classification and recognition which employs unsupervised learning algorithms. It has shown that the Lipi engine is feasible for online handwritten English character recognition to a certain degree.