"I heard that it is possible to erase security bits of 8051 and read the code. So I want to know is it really possible using some sort of technique. "

I think your question can get two answers :

1. NO. If we are talking about hobbyists/amatuers/ who have little resources in thier command and just want to do it for curiosity sake.

2. YES. If you are really determined and decide to take it up as a challenge to prove a point.

In any case read this document - this was a link given in this forum itself for one such question some time back :

http://www.cl.cam.ac.uk/~mgk25/tamper.pdf

And I am sure your question is academic in nature - you MUST be aware of the implications otherwise to try and read code that was not meant to be read.

Raghu