Frixion Heat Erasable Pens from Pilot
Frixion erasable pens from Pilot erase with friction (the eraser on the end) and heat. These sneaky pens do work on fabric and can be erased with an iron or hair dryer.
BUT, they are a bit controversial. The ink can reappear when exposed to very cold temperatures. However, the lines can be erased again with heat. The long term effects are not known so please know the risk before using them on an embroidery project.
Note: ALWAYS test your pen/pencil/whatever on your fabric before application