The Visual Cryptography Scheme (VCS) is a kind of secret sharing scheme that focuses on sharing secret im- ages. The basic idea of the visual cryptography scheme is to split a secret image into number of random shares (printed on transparencies) which separately reveals no information about the secret image other than the size of the secret image. The secret image can be reconstructed by stacking the shares. The underlying operation of this scheme is logical OR operation. The Embedded Extended Visual Cryptography Scheme (EEVCS) uses meaningful covering shares. The scheme EEVCS can be implemented by embedding random shares of secret image into meaningful cover images.The halftoning method is used to convert the gray scale image into binary im- age. After Studying existing Dithering technique of half ton- ing, Otsus Thresholding method is proposed. Least Significant Bit (LSB) matching steganography technique is used to hide the secret pixel information into the covering images.Related works on visual cryptography scheme are also investigated and it was observed that visual quality of recovered secret images are low by using existing dithering halftone based EEVCS techniques.Including Otsus Thresholding method for halfton- ing of an image can produce bright image in a better way. LSB matching steganography is a useful method to hide the secret image. This research aims at employing LSB matching stega- nography with Otsu's method to develop an efficient EEVCS system. Index Terms - Embedded extended visual cryptogra- phy scheme, Otsu's Method, Dithering technique, Least Sig- nificant bit, Visual cryptography Scheme. IntroductionTHE basic principle of the visual cryptography scheme (VCS) was first introduced by Naor and Shamir. VCS is a kind of secret sharing scheme (1), (2) that focuses on sharing secret images. The idea of the visual cryptography model proposed in (3) is to split a secret image into two random shares (printed on transpa- rencies) which separately reveals no information about the secret image other than the size of the secret image. The secret image can be reconstructed by stacking the two shares. The underlying operation of this scheme is logical operation OR. In this paper, we call a VCS with random shares the traditional VCS or simply the VCS. In general, a traditional VCS takes a secret image as input, and outputs shares that satisfy two conditions: 1) any qual- ified subset of shares can recover the secret image; 2) any for- bidden subset of shares cannot obtain any information of the secret image other than the size of the secret image. An example of traditional (2,2)-VCS is shown in Fig. 1.In the scheme of Fig. 1, shares (a) and (b) are distributed to two participants secretly, and each participant cannot get any information about the secret image, but after stacking shares (a) and (b), the secret image can be observed visually by the par- ticipants. VCS has many special applications, for example,