The digital information revolution has brought about changes in our society and our lives. The ability to access and "share" images has become increasingly easy with the internet allowing people to reach information from anywhere in the world.The boom of covert communication coincides with the appearance and growth of the Internet. The rapid spread of computer networks and shift to digitization of media creates a very favourable environment for covert communication. In this paper we propose a technique for secure transmission of secret data. The secret data is first compressed using a wavelet based compression algorithm and then embedded into the cover image. Experimental results demonstrate that the proposed technique provides a good embedding capacity and a stego image of good visual quality. However the technique is prone to some attacks. Our steganographic technique achieves a PSNR of 24-47 db.