Abstract
This paper proposes a new data hiding method for two-color images by two stage referencing. The cover image is partitioned into non-overlapping sub-blocks, and calculated different values by two stages for all pixel to find the suitable replacement pixel. For a one stage, neighboring pixels with are used to obtain difference value which is different with the current pixel value and pixels are referenced for next stage. These two values are used to embed a secret bit on a sub-block. The experimental results show that the proposed method achieves a good visual quality for the watermarked image and a high capacity for various sub-block.