Image encryption using chaotic function has been gaining popularity in recent years even though several methods for image encryption utilizing chaotic method emerging. This paper presents a new chaos based image encryption method which is based on series of confusion and diffusion processes guided by a user key based encryption and decryption. The proposed method generates large key space which results in bruit force attack. However, the extraction process has an additional method in comparison with general data hiding scheme. After the embedded secret data is extracted, the cover image can be completely restored to its original state.