With the rapid advancements in digital information transmission, technologies need for ensuring high level of data security, has become indispensible. In order to ensure the same, many cryptography and steganography techniques are in use. In the proposed methodology, both the techniques have been used simultaneously for incorporating a near fool proof security. Cryptography renders an image unreadable whereas, steganography aims at hiding secret information in the image. In the scrambled image, adaptive Least Significant Bit (LSB) substitution has been performed using Pixel Value Differencing (PVD) based on Pixel Indicator (PI) method for colour images. Here, secret data is embedded only in R and G planes while, B plane acts as an indicator for embedding. This methodology increases the embedding capacity by 50% compared to the existing methods in addition with a reasonable Peak Signal to Noise Ratio (PSNR) of 42 dB. © 2014 Asian Network for Scientific Information.