In this paper, we propose data hiding and extraction algorithms for binary images. Handwritten Signature Image can be transmitted from source to target securely over network after processing the source image by using this proposed Data Hiding Algorithm. According to the algorithm, size of the carrier image must be double (or more) the size of source image. If necessary then additional bytes or noise has to be injected into carrier image to attain the required size. To do this, the header is updated by the new value (sum of original size of file and amount of noise). This proposed technique can be applied for ownership protection, copy control, annotation and authentication of digital media. This work is specifically focused on protection and authentication of Handwritten Signature. ©2008 IEEE.