Sound localization systems are widely studied and have several potential applications, including hearing aid devices, surveillance and robotics. However, few proposed solutions target portable systems, such as wearable devices, which require a small unnoticeable platform, or unmanned aerial vehicles, in which weight and low power consumption are critical aspects. The main objective of this research is to achieve real-time sound localization capability in a small, self-contained device, without having to rely on large shaped platforms or complex microphone arrays. The proposed device has two surface-mount microphones spaced only 20 mm apart. Such reduced dimensions present challenges for the implementation, as differences in level and spectra become negligible, and only time-difference of arrival (TDoA) can be used as a localization cue. Three main issues have to be addressed in order to accomplish these objectives. To achieve real-time processing, the TDoA is calculated using zero-crossing spikes applied to the hardware-friendly Jeffers model. In order to make up for the reduction in resolution due to the small dimensions, the signal is upsampled several-fold within the system. Finally, a coherence-based spectral masking is used to select only frequency components with relevant TDoA information. The proposed system was implemented on a field-programmable gate array (FPGA) based platform, due to the large amount of concurrent and independent tasks, which can be efficiently parallelized in reconfigurable hardware devices. Experimental results with white-noise and environmental sounds show high accuracies for both anechoic and reverberant conditions.