Cryptography is used to protect digital information and converting the contents from readable format to non-readable format. Steganography is the process of hiding data by embedding data within others. An Improved Reserving Room before Encryption Algorithm is used to hide text using unused bits in an image file into image without damaging the original image. The analysis shows that the size of encrypted image is same as the original image. The quality of the image is also kept unchanged in this technique.