Steganography is an emerging area which is used for secured data transmission over any public media.Steganography is a process that involves hiding a message in an appropriate carrier like image or audio. It is of Greek origin and means "covered or hidden writing". The carrier can be sent to a receiver without any one except the authenticated receiver knowing the existence of this information. In this paper, a specific image based steganography technique for communicating information more securely between two locations is proposed. The author incorporated the idea of secret key and password security features for authentication at both ends in order to achieve high level of security. As a further improvement of security level, the information has been permuted, encoded and then finally embedded on an image to form the stego image. In addition segmented objects extraction and reassembly of the stego image through normalized cut method has been carried out at the sender side and receiver side respectively in order to prevent distortion of the Stego image during transmission.