In this paper, a new image encryption scheme using a secret key of 144-bits is proposed. In the substitution process of the scheme, image is divided into blocks and subsequently into color components. Each color component is modified by performing bitwise operation which depends on secret key as well as a few most significant bits of its previous and next color component. Three rounds are taken to complete substitution process. To make cipher more robust, a feedback mechanism is also applied by modifying used secret key after encrypting each block. Further, resultant image is partitioned into several key based dynamic sub-images. Each sub-image passes through the scrambling process where pixels of sub-image are reshuffled within itself by using a generated magic square matrix. Five rounds are taken for scrambling process. The propose scheme is simple, fast and sensitive to the secret key. Due to high order of substitution and permutation, common attacks like linear and differential cryptanalysis are infeasible. The experimental results show that the proposed encryption technique is efficient and has high security features.