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Recent years have witnessed the rapid development of the Internet and telecommunication techniques. Information security is becoming more and more important. Applications such as covert communication, copyright protection, etc, stimulate the research of information hiding techniques. Traditionally, encryption is used to realize the communication security. However, important information is not protected once decoded. Steganography is the art and science of communicating in a way which hides the existence of the communication. Important information is firstly hidden in a host data, such as digital image, video or audio, etc, and then transmitted secretly to the receiver.In this paper a data hiding model with high security features combining both cryptography using finite state sequential machine and image based steganography technique for communicating information more securely between two locations is proposed. The authors incorporated the idea of secret key for authentication at both ends in order to achieve high level of security. Before the embedding operation the secret information has been encrypted with the help of finite-state sequential machine and segmented in different parts. The cover image is also segmented in different objects through normalized cut.Each part of the encoded secret information has been embedded with the help of a novel image steganographic method (PMM) on different cuts of the cover image to form different stego objects. Finally stego image is formed by combining different stego objects and transmit to the receiver side. At the receiving end different opposite processes should run to get the back the original secret message.