I recently got an assignment - during a course on my Masters program - to embed an image with a message. For this task I ended up using StegHide and the image on the frontpage of my blog.
The original image was as follows:
Using the following commands I was able to embed a secret message into the image using the password 1234. A good practice is to create a copy of the original image, as the message will be embedded into the image (not create a new one). For this to work you need the text you want to embed in a file (in the example TheHiddenMessage.txt).
G:\temp\steghide\steghide.exe embed -cf RandersJPG.jpg -ef TheHiddenMessage.txt
The image below is the result, yes you cannot tell the difference between the two :)
G:\temp\steghide\steghide.exe extract -sf RandersJpg.jpg
This should reveal the text "You found the secret!".