Abstract-In this paper, we have modified the Hill cipher by developing an iterative procedure consisting of three steps. In the first step, the plain text matrix is multiplied with the key matrix on one side and with its inverse on the other side. In the second step, the plain text matrix is mixed thoroughly by using a function called Mix ( ). In the last step, the plain text matrix is modified by using XOR operation between the plain text matrix and the key matrix. The cryptanalysis and the avalanche effect discussed in this paper, conspicuously indicate that the cipher is a strong one and it is quite comparable with the other block ciphers.1

Now a day's online services became part of our life which performs communication digitally. This digital communication needsconfidentiality and data integrity to protect from unauthorized use. Security can be provided by using two popular methods cryptography and steganography. Cryptography scrambles the message so that it cannot be understood, where as the steganography hides the message in another medium which cannot be detected by normal human eye.This paper introduces a technique which provides high security to the digital communication by using dynamic hashing for integrity and also embedding the data in image file using steganography to misguide attacker. There by providing high security for the communication between two parties.

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