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A high capacity data hiding technique was developed for compressed digital audio. As perceptual audio coding has become the accepted technology for storage and transmission of audio signals, compressed audio information hiding enables robust, imperceptible transmission of data within audio signals, thus allowing valuable information to be attached to the content, such as the song title, lyrics, composer's name, and artist or property rights related data. This paper describes simultaneous low bitrate encoding and information hiding for highly compressed audio signals. The information hiding is implemented in the quantization process of the audio content which improves robustness, signal quality, and security. The imperceptibility of the embedded data is ensured based on the masking property of the human auditory system (HAS). The robustness and security are evaluated by various attacking algorithms. Tests with an extended MPEG4 advanced audio coding (AAC) encoder confirm that the method is robust to the regular and singular groups method (RS) and sample pair analysis (SPA) attacks as well as other statistical steganalysis method attacks.