Recently, more and more attention is paid to protect sensitive data transmitting across network.Currently,there are methods which use RDH with cover image also as information to transfer. To ensure confidentiality of cover image, it is encrypted and data hiding is done in encrypted image. In real-time scenarios we need to use color images as cover image and large amount of data to hide in image. The standard encryption methods which encrypt every bit of cover image waste large amount of time for encryption and decryption process. Our proposed methods use chaotic encryption to secure cover image which selectively encrypt some of the bits in image using confusion and diffusion methods. Since our method use RDH using reserving room in advance approach original cover can be losslessly recovered after extraction of embedded data. All the existing methods embed data by reversibly vacating room in the encrypted images. But these methods may result in some errors on image restoration and data extraction. In proposed method image recovery and data extraction are free of any error and achieves real reversibility.