Abstract We propose an optical information hiding system with pixel-free expansion visual cryptography(PEVC). In the optical concealment process, initially, a PEVC scheme is utilized to encode the secret image. This approach generates visual keys of the same size as the secret image, addressing the pixel expansion issue inherent in visual cryptography encoding schemes. As a result, it significantly reduces both storage space requirements and the network bandwidth occupied during the transmission process and exhibits a higher hidden capacity. Furthermore, PEVC is combined with the optical phase retrieval algorithm for hiding, embedding the visual keys into the phase keys. In this process, wavelength and diffraction distance are introduced as keys, enhancing the security of the system. The phase keys can be fabricated into diffractive optical elements for physical preservation and transmission in tangible form. Simulation experiments and optical experimental results indicate that the system is applicable in practical scenarios and possesses excellent security and exhibits a higher hidden capacity.