An image encryption method is described for encrypting an images using an encryption key. The encryption method includes dividing the image into pixel groups and shifting the location of the pixel groups according to an encryption key, and reordering the bits of the pixel values of the image according to an encryption key. Each shifting and reordering is done according to a shifting patterns that is defined by a shifting rule and the bit values of a bit sequence generated from the encryption key. The encrypted image is embedded in a cover image using less significant bits of the cover image for transmission or storage. Corresponding decryption method is also provided. Also described are various applications of image encryption methods in secure handling of digital images, including secure scanning, secure printing, secure ID scanning, secure check reading, remote picture ID verification, and remote document submitting and receiving systems.