In this paper a novel data embedding technique in frequency domain has been proposed using Discrete Fourier Transform (DFT) for image authentication and secured message transmission based on hiding a large volume of data into gray images. Image authentication is done by embedding message or image in frequency domain by choosing image blocks of size 2 x 2, called mask, from the source image in row major order and transform it into the frequency domain using DFT. Three bits of authenticating message/image/message-digest are fabricated within the real parts of each source image byte except first frequency component of each mask. The dimension of authenticating image followed by message digest (MD) and the content of authenticating message/image are also embedded. Inverse DFT (IDFT) is performed on embedded data to transform embedded frequency component to spatial component. In order to keep the quantum value positive and non negative in spatial domain a strong and robust technique is incorporated mainly on the first frequency component and sometimes on other component depends upon situations. The decoding is done by applying the reverse algorithm. Experimental results conform that the proposed algorithm performs better than DCT, QFT and SCDFT schemes.