Steganography and watermarking are two important areas of research and it involve a number of applications. These two areas of research are important especially when reliable and secure information exchange is required. Steganography methods usually do not need to provide strong and safe security against removing or modification of the hidden message. Watermarking methods need to be very robust to attempts to remove or modify a hidden message. A data-hider may compress the least significant bits of the encrypted image using a data-hiding key to create a sparse space to accommodate some additional useful data. With an encrypted image containing additional data, if a receiver has the data-hiding key, then he can able to extract the additional data though he does not know the image content. If the receiver has the encryption key, he can decrypt the received data to obtain an image similar to the original one, but cannot extract the additional data. If the receiver has both the data-hiding key and the encryption key, he can extract the additional data and recover the original content without any error. To enhance the embedding capacity of image steganography and watermarking for human vision, a novel adaptive number of least significant bits substitution method with private stego-key based on gray-level ranges is proposed in this paper.