I am on H1B visa and my wife is on H4 visa. Can I claim her as a Dependent while filing for the tax return. Do I have to apply for ITIN? Please explain the procedure.

Thanks

You can even file resident tax return for 2007 as Married Filing Jointly if you wait to file your tax return till you complete SPT test. Then you will get standard deduction of $10,700 and exemptions of $6,800.

To give you more information, let us know:
When did you enter the U.S. and type of visa? When did you get H1-B?

Agreed; more information is needed.