Abstr act. Effective and light weight, in terms of computational requirements robust encryption algorithms are preferable for data hiding and data security applications. Steganography data hiding, watermarking for copy right protection, secure transmission of biometric data to local or remote sites for validation and recognition, and secure data storage in a digital system are such few applications. We report in this paper an encryption algorithm which is simple and light weight in implementation but robust in its capability to hide or secure the message data. The algorithm requires small block and code based substitution of binary message data before embedding, storage or transmission. We report our work on steganography and watermarking using our proposed encryption algorithm and then simple LSB encoding, and data storage and data transmission applications with our encryption algorithm on the data. We observe higher performance compared to almost all LSB encoding techniques. The encryption algorithm thus provides both data security and data hiding capability and may be applied on all types of binary data processing as an optional and additional step.Keywor ds: LSB encoding, watermarking, Biometrics, Security Almost every information today, be it text, audio, music, image, video or multimedia are dealt with digital techniques for storage, transmission, or protection. Modern communication systems or storage systems are heavily dependent on computer systems and internet and hence are prone to attack. Also as most of the user information is in digital domain, digital signal processing for storage, compression, hiding and security are most prevalent now a day. The message information often needs encryption like processing techniques before they are put to sto-1 MD. A. Hussain ()