As digital images are widely used in social media, medical, military and other fields, ensuring the privacy and security of image data has become a critical concern. Firstly, we propose a novel four-dimensional hyperchaotic system and validate that it exhibits a broad chaotic range, as demonstrated by bifurcation diagrams and Lyapunov exponent experiments. Additionally, simulated circuit diagrams verify the hardware feasibility of the proposed system. Secondly, we design a dynamic iterative scrambling (DIS) scheme that dynamically divides the image into multiple matrices for spatially indexed scrambling. Excellent substitution performance can be ensured by multiple iterations. In the diffusion stage, a multidirectional bit-level L-shaped (MDBL) scheme is proposed. Diffusion is conducted on the bit plane using a designed cross-multiplanar selection algorithm, which fuses the high and low bit planes, thereby enhancing the diffusion performance of MDBL. Thirdly, Based on the above concepts, a novel four-dimensional hyperchaotic system and an encryption algorithm based on bit-level diffusion are proposed. Finally, experimental results and security analyses demonstrate the effectiveness of the novel 4D hyperchaotic system and image encryption scheme. The proposed encryption scheme exhibits robust anti-interference capabilities and effectively safeguards image security.