There is an ever-present need for non-allergenic antibacterial and antifungal wound dressing with a superior healing property for chronic ulcers. Among the entire modern wound healing dressings, hydrogel has a good capacity to donate moisture or absorb exudate and thereby providing a moist environment to facilitate wound healing process and at the same time protect the wound too. In the present study, povidne iodine loaded acrylamide based biocompatible biodegradable hydrogel dressings incorporating alginate, chitosan and gelatin showed good fluid absorbance capacity. The addition of honey showed improved tensile strength and moisture absorbance capacity of the hydrogel sponge. Apart from tensile strength, all the formulations were evaluated and compared for thickness, % elongation, folding endurance, swelling ratio, % of drug loading, thrombus formation, haemolysis assay and dispersion characteristics. Hydrogel containing chitosan and alginate showed better results in terms of tensile strength 4323gm/mm2, drug loading (27.17 %), thrombus formation (0.002 gm), drug release (97.99 %) and other parameters compared to gelatin based hydrogel. Wound healing study using well established wistar rat model showed complete healing of wound i.e. 98.28 % within 12 days. Povidone-Iodine and honey loaded acrylamide hydrogel with chitosan and alginate presented a very promising wound healing dressing. This honey hydrogel dressing can be a good alternative for infected chronic wounds and diabetic foot ulcers