The secure communication of information is a major concern over the internet. The information must be protected before transmitting over a communication channel to avoid security violations. In this paper, a new hybrid method called compressed encrypted data embedding (CEDE) is proposed. In CEDE, the secret information is first compressed with Lempel Ziv Welch (LZW) compression algorithm. Then, the compressed secret information is encrypted using the Advanced Encryption Standard (AES) symmetric block cipher. In the last step, the encrypted information is embedded into an image of size 512 × 512 pixels by using image steganography. In the steganographic technique, the compressed and encrypted secret data bits are divided into pairs of two bits and pixels of the cover image are also arranged in four pairs. The four pairs of secret data are compared with the respective four pairs of each cover pixel which leads to sixteen possibilities of matching in between secret data pairs and pairs of cover pixels. The least significant bits (LSBs) of current and imminent pixels are modified according to the matching case number. The proposed technique provides double-folded security and the results show that stego image carries a high capacity of secret data with adequate peak signal to noise ratio (PSNR) and lower mean square error (MSE) when compared with existing methods in the literature.