Cloud computing is a fast growing technology that transforms the way IT services is used in businesses. Collaborative cloud or federated cloud extends this potential even more by offering true unlimited capacity. Despite its potential to provide millions of organizations with storage and computational power at low costs and great speed, many organizations are still skeptical to use these services due to security concerns. This is because “Privacy” in cloud has not been well defined and involves trust on the cloud service provider. This paper is to propose a novel method, which provides a secure way of storing data in the cloud and at the same time, allows the user to perform some computation on the stored data without compromising the security of the data.