Extended matrix encoding algorithm is totally different from most of the LSB replacement or matching steganographic schemes. With reducing the amount of necessary changes the extended matrix algorithm is used to increase embedding efficiency. By using this algorithm, the hidden message is inserted into carrier media and can be transferred via safer channel. In this algorithm the quantitative DCT coefficients of JPEG image which makes the data safe from visual attack. The embedding efficiency and embedding rate get increased to large extent by changing the hash function in matrix encryption and changing the coding mode.