Today's Internet world is not secure from data thieves and hackers, and there is a need to design a system that enables the Internet users to exchange their secret and private data safely across the web. To guard privacy and security, hiding information provides most effective method. Cryptography and Steganography are the two most important sub-disciplines in information hiding. In this work, Least Significant Bit (LSB) based steganographic method is applied on different file formats such as Bitmap (BMP), Graphics Interchange Format (GIF) and Portable Network Graphics (PNG). A new algorithm called Rotatocrypt is designed and implemented for effective encryption and decryption. A steganographic application namely SteganPEG which is a combination of Cryptography and Steganography for hiding the secret information is developed. It enables embedding of multiple files in a single cover file. As a part of this work, the LSB based steganographic technique is also applied on multimedia files such as .bmp, Waveform (.wav) and Audio Video Interleave (.avi). The proposed methods are designed and implemented by using Java, Microsoft Visual Basic and performance is evaluated using MATLAB.