Abstract: A novel technique to increase the embedding capacity of a double layered protected encryption algorithm was proposed in this study. Before, wrapping the watermarking data in the cover image DCT transformation was applied to the coefficients of the cover image. The watermarking data was compressed before embedding to reserve more space for embedding more data. This model also offers the flexibility of embedding more than one watermarks. The encryption was performed with the Arnold transformation and the Chaotic encryption algorithm to establish robust, significant and improvised data security.