Cryptography coupled with information hiding has received increased attention in recent years and has become a major research theme because of the importance of protecting encrypted information in any Electronic Data Interchange system in a way that is both discrete and covert. One of the essential limitations in any cryptography system is that the encrypted data provides an indication on its importance which arouses suspicion and makes it vulnerable to attack. Information hiding of

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... y provides a potential solution to this issue by making the data imperceptible, the security of the hidden information being a threat only if its existence is detected through Steganalysis. This paper focuses on a study methods for hiding encrypted information, specifically, methods that encrypt data before embedding in host data where the 'data' is in the form of a full colour digital image. Such methods provide a greater level of data security especially when the information is to be submitted over the Internet, for example, since a potential attacker needs to first detect, then extract and then decrypt the embedded data in order to recover the original information. After providing an extensive survey of the current methods available, we present a new method of encrypting and then hiding full colour images in three full colour host images with out loss of fidelity following data extraction and decryption. The application of this technique, which is based on a technique called 'Stochastic Diffusion' are wide ranging and include covert image information interchange, digital image authentication, video authentication, copyright protection and digital rights management of image data in general.