Data embedding is a new steganographic method for combining digital information sets. This paper describes the data embedding method and gives examples of its application using software written in the C-programming language. Sandford and Handel produced a computer program (BMPEMBED, Ver. 1.51 written for IBM PC/AT or compatible, MS/DOS Ver. 3.3 or later) that implements data embedding in an application for digital imagery. Information is embedded into, and extracted from, Truecolor or color-pallet images in MicrosoftTM bitmap (BMP) format. Hiding data in the noise component of a host, by means of an algorithm that modifies or replaces the noise bits, is termed `steganography.' Data embedding differs markedly from conventional steganography, because it uses the noise component of the host to insert information with few or no modifications to the host data values or their statistical properties. Consequently, the entropy of the host data is affected little by using data embedding to add information. The data embedding method applies to host data compressed with transform, or `lossy' compression algorithms, as for example ones based on discrete cosine transform and wavelet functions. Analysis of the host noise generates a key required for embedding and extracting the auxiliary data from the combined data. The key is stored easily in the combined data. Images without the key cannot be processed to extract the embedded information. To provide security for the embedded data, one can remove the key from the combined data and manage it separately. The image key can be encrypted and stored in the combined data or transmitted separately as a ciphertext much smaller in size than the embedded data. The key size is typically ten to one-hundred bytes, and it is derived from the original host data by an analysis algorithm.